While tax planning may not be a topic that most people would jump out of bed for, it could certainly be something which keeps them up at night without the right support.
Although trustees are not tax advisors, those which offer tax compliance services can play a significant role in easing these concerns by working in partnership with a network of specialist service providers. Coordinating and implementing effective tax strategies involves many moving parts that may not immediately spring to mind. To make the subject slightly more interesting, imagine the demands of buying a car…
The first step on the journey is that an individual (or family) recognises that they need, or want, a car. Perhaps they may have previously been using public transport or walking, but something has changed – such as their financial circumstances, or their travel demands – and a car has become either a possibility or a necessity when it wasn’t before.
They are now faced with a choice. They could take it upon themselves to compare various vehicles to best suit their needs and budget, learn how to do all the maintenance for the life of the car, keep abreast of changing emission regulations which may impact them and keep funding aside for repairs to potential accidental damage.
Most people, however, will either not have the interest, skills, or desire to take on all these tasks. Whether their car is for everyday use, an investment, or even a gift for someone else, most will simply want to enjoy the drive and outsource roles to various suppliers. From dealerships and garages to insurers and loan providers, it makes much more sense to rely on specialists who can manage the responsibility and risks that come with car ownership.
The biggest challenge for car owners is choosing the right service providers to trust to keep the car running smoothly, ensure compliance with all regulations, and provide peace of mind.
The same is true when it comes to wealth. People who have identified that tax planning is necessary and/or beneficial will face similar decisions. Do they manage everything themselves – keeping up with evolving laws, implementing complex strategies, and shouldering the risk of non-compliance – or do they appoint specialists to handle the complex twists and turns? Just as a mechanic ensures a car’s longevity and performance, a reliable private client service provider ensures wealth is managed efficiently, compliantly, and effectively, allowing clients to focus on what matters most to them.
The challenge for individuals who engage service providers is often knowing where to start or who to trust with their assets. What constitutes the ‘right’ provider will depend entirely on the client’s circumstances and objectives at any given time. It can quickly become a complex and time-consuming process to find and scrutinise various professionals at each stage.
By starting with a trustee, clients will be supported from the outset in identifying when specialist advice is needed, where to find it, and recommendations on who to trust. A high-level overview of a trustee’s role can be segmented into five key areas, acting as navigators, facilitators, interpreters, responders, and protectors.
Navigators
While trustees are not tax advisors, they are well-equipped and qualified to ensure that tax compliance is maintained, once appropriate advice has been received.
Trustees have a duty to ensure that they understand tax compliance and will keep abreast of legislation in each relevant jurisdiction. With a thorough understanding of their clients’ circumstances, they will be able to identify individuals who will be affected by changes and provide tailored services to ensure tax efficiency is maintained.
They will also ensure that all tax deadlines (eg filing and reporting) are met, and that work is completed to a high standard in accordance with regulatory requirements. In doing so, they provide peace of mind to clients while shouldering the significant burdens of risk and responsibility.
Facilitators
Trustees play a crucial role in connecting their clients and beneficiaries with expert tax advisors, where required. This ensures the delivery of comprehensive financial planning that maximises tax efficiency while remaining fully compliant with all legal and regulatory obligations.
The value of a trust and corporate service provider is inherently tied to the strength and reliability of its network. By conducting rigorous due diligence, trustees build and sustain relationships with top-tier intermediaries, sparing clients the effort of independently sourcing tax advisors or other professionals, where necessary. This approach not only streamlines the process but also provides clients with confidence that any third-party introduction is scrutinised, reputable, and aligned with their unique needs and objectives.
Interpreters
The role of a trustee, however, goes far beyond simply facilitating introductions to specialist advisors; they also serve as interpreters, bridging the gap between technical expertise and the client’s understanding. Trustees play a vital role in ensuring that complex tax advice, which is often laden with technical jargon, is effectively communicated in a clear and accessible manner.
While a tax advisor – or other specialist – may have a micro view of one area of a client’s wealth journey, a trustee will see the full picture and will be able to provide context of the advice within broader objectives, while ensuring that all recommendations align with long-term goals and values.
Responders
Trustees play a vital role as responders, adapting not only to changing tax regulations, but also to a myriad of evolving client circumstances. These may include relocations to new jurisdictions, shifts in business interests, or changes in family structures.
It is essential that trustees establish and maintain strong relationships with clients and beneficiaries, prioritising open communication through the life of the relationship. This ensures that trustees are aware of any changes in circumstances and can respond accordingly.
Protectors
In addition to reacting to change, trustees adopt a proactive approach to mitigate risk. They anticipate potential challenges by conducting regular reviews of trust arrangements, engaging expert advisors, and implementing robust governance frameworks. This dual role of reacting and pre-empting ensures trustees provide a resilient, forward-thinking service that safeguards client interests for the long-term.
Conclusion
The scope and complexity of technical knowledge required for effective and compliant tax planning and implementation is typically beyond the capacity of any one person or service provider. A trustee, however, acts as a central point of contact for the client while coordinating with a network of specialist advisors. In doing so, they ensure a comprehensive and collaborative approach to meet both the current and future needs and expectations of all their clients.
This article was first published in ThoughtLeaders4 Private Client Magazine – Tax Edition.
