The partners of Wilson Browne LLP are also directors of Wilson Browne Trust Corporation Ltd. This is an added benefit for our clients.
What is a trust corporation?
In English law, a “trust corporation” is a company that is either carrying out trust business or is acting as a trustee.
There is a growing rise in law firms choosing to take on this role and adopting the status themselves to carry out several fiduciary roles. Fiduciary roles that have traditionally been carried out by individual partners in a law firm or other organisations such as banks.
Rule 30 of the Public Trustee Rules 1912 sets out the requirements for firms to attain trust corporation status. They must be a registered constituency under UK (or EC) law, they must be permitted by their constitution to be able to carry out trust business in the UK, have at least one business in the UK and they must have at least £250,000 issued share capital (with £100,000 of that being given in cash).
On attaining the status, common examples of the roles law firm-owned trust corporations take up include that of; Trustees, Executors, Deputies, Attorneys and Nominees.
What are the advantages of using a law firm-owned trust corporation?
With each role, advantages and benefits exist to appointing a law firm over individuals and some universal benefits apply to all.
Executors & Trustees
Appointing a law firm to administer an estate either solely or jointly with another person known to the deceased is increasingly common. The advantage of having a solicitor weighing in is apparent in complex estates, having qualified legal professionals heavily involved in the process from start to finish will streamline and simplify what can otherwise become a drawn-out process.
Aside from this, there is the protection an estate can draw from the high duty of care a law firm-owned trust corporation owes – as made clear by the Trustee Act 2000. Furthermore, in the unlikely event that such duty is breached, law firms benefit from the protection of compulsory professional indemnity insurance – providing suitable recourse for those wronged by a breach.
With these in place, the likelihood of an unscrupulous or incompetent Executor upsetting the process is greatly reduced.
Law firms can be appointed as Executors & Trustees by the testator of a Will, but they can also be appointed by the Court itself in contentious Probate matters where the Executors have been challenged, or where all beneficiaries consent.
Attorneys & Deputies
Law firm-owned trust corporations are increasingly being appointed to act as an Attorney making legal decisions on behalf of those who have lost capacity. This is done through appointing them when creating a Lasting Power of Attorney for Property and Financial Affairs – as permitted by s.10(1)(b) of the Mental Capacity Act 2005.Similarly, the advantages of having experienced professionals looking after your financial decisions is apparent, as before, the duty of care and indemnity insurance provide that extra guarantee that an individual’s affairs are given the highest level of care.
The Court is also able to appoint a trust corporation to act as Deputy for an individual who has lost capacity to deal with their financial affairs, and does not have a Lasting Power of Attorney in place and/or does not have any layperson competent and willing to act as an Attorney.
Trust corporations can not be appointed to manage an individual’s health and welfare decision making.
Nominees & Trust Protectors
Corporate and individual clients can have trust corporations assigned to them to act as nominees. This can be for a variety of reasons. From acting as a litigation friend assisting a person lacking capacity to carry out litigation, all the way to being appointed as protector of an off-shore trust.
Appointing a trust corporation rather than individuals also has the advantage of the fact that they are constantly available and able to carry out what is required of them. Individual trustees are naturally indisposed and unavailable at various times; they can fall ill, be on extended leave, retire and will at some point pass away. With a trust corporation, there is a guarantee of seamless continuation and availability. Other than ease, this can also save the fees involved in appointing new trustees/deputies/attorneys.
Across all fiduciary roles, that trust corporations can take, appointing a law firm also carries with it the advantage of meticulously transparent record keeping. Law firms must keep a clear record of all transactions and dealings they enter into, increasing accountability and giving further reassurance of correct management.
When a law firm-owned trust corporation is appointed, unlike a bank or other commercial appointment, the firm will be classed as non-trading. In practice, the parent law firm will carry out the legal work and charge the trust for it. This has the advantage of maintaining an independent decision-making process that avoids conflicts of interest. Ensuring the trust is managed both effectively and fairly, with no ulterior motives.
To top off the extra protection provided by a law firm-owned trust corporation – they are required to register with the Solicitors Regulation Authority and must have dedicated Compliance Officers, for both Legal Practice and Finance and Administration.
Summary of advantages
- Added duty of care
- Benefit from professional indemnity insurance
- Continuously available to carry out duties
- Transparent record keeping
- Independent decision making
- SRA & compliance protection