Duke has a strong background in trusts, family business succession, family office architecture, entrepreneurship and governance for families and their businesses. Before founding her practice, she led two private family offices and spearheaded a private bank’s global family wealth program.

What would be on your “check list” for trustees on what they should be doing to successfully fulfill their role?

Every trustee’s checklist is based on the three functional areas of a trustee’s responsibility: 1. Administration of the trust 2. Investment and management of trust assets and 3. Making distributions to beneficiaries.  

If we start with the premise that a private trust is a gift of love meant to enhance the life of a beneficiary, it is a wonder how very little focus is really placed on bringing this third function to life.  A trust would not exist, but for the existence of the beneficiary, and yet so much of the work of trustees has been focused on administration and investing.  My checklist starts with beneficiaries, supported by trustworthy investing and meticulous administration.  

There is a lot of concern around the impact of wealth on beneficiaries – so what should trustees do to address it?

Certainly more than simply cutting checks.  Many trustees treat distributions as a mechanical, “tick-box” exercise.  The focus is on making sure distributions are properly authorized, documented and timed so that once the check is in the mail, the trustee’s work is seen as done.  Too often, very little is done to ensure the distribution is empowering and enabling to the beneficiary.

Wealth impacts lives, and significant wealth has the very real probability of knocking beneficiaries off kilter.  But it is not the money itself that causes this instability; it is the inability of the beneficiary to integrate the money into their life.  Helping beneficiaries with this is some of the most crucial work of trustees.

What is behind this current state-of-play in the fiduciary world?

The work of fiduciaries has become a business and performance has been distilled down to quantitative metrics: investment returns, risk weightings, compliance benchmarks, and let’s not forget profitability.  This focus on numbers – by both regulators and business heads – has reinforced the tendency of trustees to focus on things that are easily measured. It is much easier to calculate the return of a portfolio than to measure the ways in which a trust has enhanced the life of a beneficiary.

But as you say, trustees are in business.  How is it possible to make this significant shift in focus in today’s business environment?

The shift may not be optional.  I think the potential for revolution is brewing in the trust world, and it may very well come from the beneficiaries themselves.  It is beginning to dawn on them that the trustee can and should be held to a higher standard of performance when it comes to their interactions with beneficiaries.   What is often a rote and somewhat adversarial relationship should be transformed into a deeper understanding and partnership between the trustee and the beneficiary.

Trustees need to understand the individual aspirations, aptitudes, and challenges of beneficiaries.  And they should be mentoring and supporting beneficiaries as they work to use inherited wealth well.

What does this look like?  How will trustees approach building out the service of beneficiaries?

Just as we saw a sweeping trend toward professionalization of the investment function in trusts over the last two decades, with an increased use of allocation models, sophisticated investment consultants and investment policies, I can envision a similar professionalization of the distributive function.  I would anticipate the growth of a group of professional services that trustees will use in knowing, coaching and growing beneficiaries, assessing qualitative growth and the capacity of beneficiaries to build meaning and purpose in their lives.

This is the qualitative work of trustees. And we know that not all things that count in life can be counted.