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The Professional Trustee Team

Annual Trustee Meetings (ATM): Explained

I hope you've enjoyed your Christmas break and are now fully rested, ready to tackle the New Year. Usually most of us have some spare time at the beginning of a new year and I recommend some of this time being used by trustees to conduct an Annual Trustee Meeting ("ATM"). An ATM is our way of of taking care of your trust to protect you, your family and your future.

So what exactly is this and how does it help the trust?

Well, trustees have a duty at law to annually review the affairs of the trust, so by holding this meeting they are satisfying their duty. Additionally, this meeting will go a considerable way to ensuring the successful operation of the trust and can be instrumental in avoiding a trust failure.

The Value of an ATM

To demonstrate how an ATM can help a trust, let's take the example of Mr and Mrs Boiler. They were the trustees of the Boiler Family Trust which contained the following assets:

  • Family home;
  • Shares in Boiler Orchard Limited; and
  • $47,000 in cash on term deposit.

When I looked at this trust it initially appeared to be in good health. But it soon became apparent when reviewing the financial statements and talking to the trustees that the assets of the trust were under threat. You see the liabilities of the trust had increased in the last two years. I wanted to know why that was.

The trustees told me that the trust's orchard business had done well over the years but in the preceding two years a large supermarket had come to town. When this occurred, the town's population purchased all the goods they needed from the supermarket.  

This meant the produce the orchard produced wasn't selling, and what was selling had to be sold at a heavily discounted price. As a result, the trust had suffered losses in the last two years and had to increase its bank borrowings just to service debt.

I was not the professional trustee of this trust but Mr and Mrs Boiler had come to me for advice. I immediately recommended the orchard be sold. It was a case of selling in an orderly fashion or in another year, having the bank foreclose and sell. The latter option was not attractive. A sale proceeded and financial disaster was avoided. 


What's interesting about this case is if this trust had a professional trustee who had conducted an ATM with their co-trustees, two things would have been identified.

First, the news that the supermarket was arriving in town would have been aired.

Secondly, the professional trustee would have considered this broadcast and discussed the need to sell the orchard business. The professional trustee would have given this advice because it would have been clear what was going to happen.

Hopefully, all trustees would have agreed to sell the business and the need to increase debt would have been avoided. Overall, the trust would not have suffered the loss it did, as the trustees could have taken action much sooner than what they did.

I hope you can see from the above example the value in holding an ATM.

ATM Checklist

At the meeting several points should be addressed. These are as follows:

  • Trustees should identify and discuss the objectives of the trust and determine whether those objectives should be carried on in the forthcoming year.
  • A schedule of assets and liabilities of the trust should be completed and analysed. Trustees should, in particular, discuss how well the investments are performing and how comfortable they are with the level of debt the trust is carrying or exposed to.
  • Trustees should check the assets of the trust are well maintained and if maintenance is necessary, should make a list of what is required and who will be instructed to carry maintenance out.
  • All insurance policies for the assets of the trust should be checked to ensure insurance cover is adequate and policies are held. A report by the professional trustee on their findings of the Financial Statement Review they have undertaken should be given to all other trustees.

The above list of points is not exhaustive but merely suggestive. This is because the matters discussed at each trust's ATM may differ depending upon the nature and objectives of the trust.

Lastly and most importantly, once the ATM has been completed, the minutes of the ATM should be prepared and signed by all trustees.

Those minutes should contain the decision the trustees have unanimously made regarding whether or not to retain the current assets of the trust given the nature of those particular assets and taking into account the objectives the trustees have. In my experience, this task is best carried out by the professional trustee.

I hope this information spurs you on to holding an ATM. As always, if you have any queries, would like a review of your trust or need help, just contact us.  A review of your trust and structures may end up saving you money and a lot of heart-ache. We work by phone, email or Zoom for your convenience.

Best wishes for the New Year.

The Professional Trustee Team
The Professional Trustee Team
© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

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Matthew was extremely well prepared and delivered his 4 hour presentation like a natural. It was very informative and I believe the value of the information well exceeded the investment in the event. (That doesn't mean putting the price up for the next one though! :) - Johnny

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