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The Need For Trust Portability

Flexibility and responsibility have to be drafted as part of any trust agreement. It is possible that a corporate trustee, perhaps the trust department of a chartered bank, will be bought or merged by another institution. The trust staff with which one worked comfortably for years may be replaced by other people who are not competent or who impose excessive fees on the trusts they administer. Individual trustees can make serious errors of judgment, as a bishop in British Columbia did several years ago when he invested over $1 million held in trust for the benefit of elderly nuns in a race course for thoroughbreds.

Portability, the right of trustees or beneficiaries to change trust companies, is a valuable power that ensures that a trust company cannot keep a trust if its administration is too costly or otherwise unsatisfactory. Portability conditions, which must be drafted into the trust agreement, is therefore a competitive tool that can keep a trust company aware that it must satisfy beneficiaries and the trustees or lose the business.

It is essential to prevent the trustees from having such a vested interest in a trust that they become the primary beneficiaries while only crumbs remain for the intended beneficiaries. Tax strategies and investment schemes are less important than the fidelity of those entrusted with the fruits of a lifetime of work. Therefore, keeping the roles of trustee, investment advisor, and custodian separate is one way to ensure that everybody knows what has to be done to keep the trust's business, which is to provide genuine and cost-effective assistance to the beneficiaries.