I had a telephone call from a friend last week. He was telling me about the problems that one of his friends, a lady, was facing since the death of her husband several years ago.
Their children were still minors at that time and in her husband’s Will, he had appointed his brother as the executor and trustee, and requested his brother to hold his estate on trust until the children were grown up. According to the lady, her husband had left the family about RM200,000. Years passed. Several weeks ago when her grown-up children approached their uncle for the money, they were told that there was only RM16,000 left. The trusted trustee had squandered the money through gambling.
This is an age-old story, repeated yet again and again with different players, and each time nobody suffers more than the beneficiaries through this breach of trust.
What could his friend do, I was asked. Well, has she tried talking further to him for a practical solution? At the last resort, she could always take her brother-in-law to court in order to recover the money but she should also consider whether this is worth the while. Is there any real hope that she and her children can recover the money from their uncle? Does he have the means to pay them back? If not, taking court action may be futile and not resolve anything at all, safe make the uncle bankrupt. In that case, my friend said, the lady may have little choice but to accept whatever there is left in the trust fund.
This little episode is a reminder that good though it is for people to create trust funds for their families, the fund should be managed properly with proper trustees. Asking an individual to do the job of a trustee may be difficult sometimes, because it can be very hard to resist touching the money. Like in this case.
In my opinion, there is nothing like appointing a trust corporation to do the job. Besides being an impartial body that acts in the best interest of the beneficiaries, you have the added comfort that this trust corporation will be fully responsible and accountable for the fund under its management.