When a kick is needed

One of the great things about engaging the services of a family office is to cut the crap. Some professionals paid by the hour are tempted to prevaricate, because they are then paid more. The family office sits alongside the family with the aim of saving them time and money.

Last week Robert phoned me he was really cross. Robert is the beneficiary of a trust in Jersey from which his former wife Jennifer had been the settlor and she and her two children had been beneficiaries.  As part of their divorce settlement Robert had paid Jennifer and their children a sum of money and they had been removed as beneficiaries in 2001. The purpose of the trust had therefore been satisfied and so understandably Robert wanted the assets in the trust paid to him.

The trustees had done nothing in fifteen years other than collect their yearly fee which was based on the value of the assets in the trusts – which was substantial. So a few weeks ago Robert came to see me to explore what could be done.

I phoned the trustees and explained to them that Robert wanted the assets ‘appointed’ to him, in other words transferred to him. They confirmed that they would engage lawyers and get a Deed drawn up. That was fine – the document needed could fit on one page, so would not take long to draft. I chased up a week later and was told that instructions had been given to the lawyers to proceed.

Two weeks later, nothing had happened. I telephoned again and was told that instructions had not been given to the lawyers, because their in-house team had said that under the terms of Jennifer’s removal she had been given an indemnity from the trustees, which was not restricted in time and so remained in place. The trustees therefore needed to hold onto the trust assets to protect them against this ongoing exposure!

I informed Robert of this and he hit the roof. I pointed out to him that this problem could easily be resolved if Jennifer gave the trustees a waiver of her rights, and if not he could cover the risk with insurance.

When Robert calmed down he explained that he was on good terms with Jennifer and could see no reason why she would not sign a waiver.

I wrote to Jennifer explaining to her the situation,  taking care to point out that she should take legal advice if she was uncertain as to what was being asked of her and telling her what she needed to say to the trustees. She responded by saying that she understood what was being asked of her and e mailed the trustees accordingly. I then hounded the trustees until a Deed was prepared and signed and the assets were transferred to Robert.

Last week we had a meeting of our team of experts; leaders in the fields of matrimonial, dispute resolution, family company issues, investment strategy, estate planning, succession and offshore trust structuring. Each of them gave shocking examples of professional prevarication to preserve fees.

Rhiannon our matrimonial expert said she had heard of couples, who had no jurisdictional issues, spending years in unnecessary litigation when both parties would have been able and willing to mediate. Not only had their joint assets been depleted but the pain been prolonged and their children had suffered, simply because neither party had been made aware of an alternative to court litigation.

Richard had had the same experience; families made to go through years of expensive litigation when the dispute could have easily have been resolved through inexpensive mediation.

It is hardly surprising therefore that family office services do not charge by the hour. We charge on a fixed fee basis with a success fee at the end; we want to encourage short letters, simple solutions and speedy outcomes. There are of course times when a solution is not immediately obvious, but then we proceed in stages – until a solution is in sight – and charge accordingly. 

Of course, there are many professionals who do not engage in prevarication crap, and if their clients come to us for a second opinion we tell them that they receiving a first class service, that they are not being overcharged and we can little to assist, however this is sadly not always the case.

If you would like to book an appointment with me please contact Svetlana on 020 3740 7423 or svetlana@garnhamfos.com