The practice of trust administration is undergoing a metamorphosis. In ways that are similar to the modernization of trust investment practices in the 1990s (in response to the widespread adoption of the prudent investor rule), the administration of trusts is responding to a wide range of legislative and demographic changes, which are altering fundamental fiduciary practices. These changes include trust modification (facilitated by the wide adoption of trust decanting statutes); reallocation of fiduciary responsibilities (using directed trust legislation); beneficiary notification (the Uniform Trust Code’s Section 813 and similar statutes requiring notification of and accounting to remainder and current beneficiaries); and the emergence of a beneficiary “rights” movement (reflecting the intersection of consumer expectations and fiduciary duties).
A more subtle, and much needed, renaissance is occurring in the realm of trustee/beneficiary relations. Two prominent advocates for this change are Hartley Goldstone and Kathy Wiseman, whose book Trustworthy: New Angles on Trusts from Beneficiaries and Trustees has recently been published.
In his introduction to Trustworthy, author and family advisor Jay Hughes notes that a significant number of trust beneficiaries find the trustee relationship to be burdensome. Trustworthy is part of Goldstone’s and Wiseman’s quest to address this lamentable phenomenon by re-engineering “the beneficiary relationship toward its higher functioning [facilitating each] beneficiary’s independence ... self-awareness, self-empowerment and full pursuit of happiness.” The approach they’ve developed is a combination of appreciative inquiry (one of the tools of positive systems change), positive psychology and family systems theory.
Family systems theory is a well-respected psychological approach to understanding individuals and families. It’s based on the teachings of the late Dr. Murray Bowen, a psychiatrist and founder of the Georgetown University Center for the Study of Family Systems. Central to Bowen’s approach is a perspective that the family is an emotional unit, whose reciprocal interactions contribute significantly to understanding individuals within the family. Trustees become part of this system as a member of the “triangle” connecting the grantor and the beneficiary through the fiduciary relationship. Wiseman suggests that “one of the primary goals of trust administration be the raising the next generation from dependence to interdependence to independence.”
To accomplish that goal, Goldstone and Wiseman encourage all of the participants in trust relationships—grantors, beneficiaries, trustees, attorneys, accountants and other advisors—to think about their role in “maximizing the beneficiary/trustee relationship and the well-being of the family for generations.” Wiseman notes that the trust relationship complements the relationship between the grantor and beneficiary as another form of “nurturing,” in that “it has the potential to educate the next generation on the facts of living a fiscally sound life.” Further “it is a unique and significant opportunity to promote maturity and a more defined ‘sense of self’ in the beneficiary.”
Goldstone suggests that beneficiaries have three tasks to “reposition their trusts from being burdens, to being resources”—understanding basic “quantitative information” (trusts terms, trust law, statements, policies and procedures); learning how to “build a positive relationship” with the trustee; and coming to view the “trust as a gift in support of the journey toward a fulfilling, productive, meaningful life.” Wiseman writes that when “considering trust creation and administration as an opportunity for greater maturity, one asks a different set of questions. Is it possible to receive unearned income, and still be held accountable for one’s life…? Is it possible to understand where trust-creator control originated and how to think about it as a family process?”
These are questions that ought to alter our paradigm of the relationship among grantors, trustees and beneficiaries. To facilitate that conceptual shift, Wiseman and Goldstone commenced “The Beneficiary and Positive Story Project” in 2010 to gather examples of optimal relationships between beneficiaries and trustees. To do so, they interviewed a multitude of participants in the trust administration realm—trustees, beneficiaries, attorneys, accountants and other advisors—seeking and gathering stories which would illustrate engagement around the qualitative aspects of trust management. The stories were initially posted to their website, NavigatingTheTrustscape.com, then compiled in Trustworthy.
Goldstone and Wiseman have thoughtfully selected 25 of these stories and grouped them into four chapters organized around the themes of transcending dilemmas, learning from others, making wise decisions and benefiting from enduring, positive trust relationships.
Through the stories, the authors challenge each of us involved in a trust relationship to re-examine our roles. One beneficiary (who’s one of eight siblings served by elderly, tradition-bound trustees) describes the remarkable process in which she began to engage her trustees as a distinctive individual. She observes, “If a beneficiary sits home waiting for the trustee to change, nothing is going to happen. The beneficiary must be ready to say ‘I am prepared for a journey with my trustees to educate them about who I am and about my goals and aspirations, so they, in turn can come on that journey with me.’”
This is a marvelous book for every “traveler” on the trust journey, one which can stimulate us to re-examine our roles so that we might “maximize the beneficiary/trustee relationship and the well-being of the family for generations.”