CASE STUDY: Passing on Your Wealth (Gerald’s Trust)

Gerald, an elderly widower established a Trust in 2005 to provide an additional income for his niece, Mary. Gerald felt that Mary had made some ‘unfortunate’ choices over the years and he wanted to provide her with a regular income during her life. He also wanted Mary’s three children to receive $3,000 a year toward their university expenses and to preserve the value of the Trust’s assets so the children would inherit the funds upon Mary’s death.

 

The Trust owned a small commercial property and term deposits of $750,000. Gerald appointed a professional trust company alongside his cousin as trustees. The trust company would manage the administration and tax obligations of the Trust.

 

The Trustees appointed Glenn as the Trust’s Financial Adviser to come up with an appropriate investment mandate that would maintain the value of the Trust capital and also satisfy the income requirements of the beneficiaries, Mary and her children. Gerald was concerned that with the low interest rates there wouldn’t be enough money to achieve his objectives so Glenn did some investment modelling to find the right balance between meeting the trust objectives and keeping in line with an appropriate risk strategy.

 

With Glenn’s help Gerald was able to achieve what he wanted for his beneficiaries and the Trustees were helped to fulfil their fiduciary duties and administer the Trust effectively.