Trust or financial manager?

Who can be appointed

There are various options when determining the appropriate trustee or financial manager. The options include NSW Trustee and Guardian, private trustee companies and individuals.   

In relation to trusts, there must be at least 2 individuals appointed as trustee. In relation to financial managers who are individuals and private trustee companies, these private appointments are supervised by NSW Trustee and Guardian pursuant to Division 2 of the NSW Trustee and Guardian Act 2009 (NSW). 

Whoever is appointed, it is important to consider the ability, skill, financial acumen and potential conflicts of interest of who is being considered for the appointment.

Factors to consider

1. The person's age, whether they have a disability and the nature and extent of the disability.  If the person is a minor and likely to be able to manage their own financial affairs on attaining 18 years or older, then a trust may be an appropriate choice. If the person is a minor or an adult and is unlikely to be able to manage their own financial affairs, then the appointment of a financial manager may be more appropriate. You will also need to consider if the orders should apply to their financial affairs generally (which would include pre-existing assets and future income sources) or be limited to the awarded sum. In relation to a trust, the trustee’s duty relates to the assets of the trust and does not extend to the personal financial affairs of the beneficiary.  If a beneficiary attains the age of 18 years and does not have the capacity to receive the trust funds, then the funds will remain in the trust until the beneficiary gains capacity or dies.
2. The views and preferences of the person and their family about the management of the funds, use of the funds, costs for trust administration, costs for financial management, the investment of the funds and type of services required.
3. The person's existing location and if they intend to move to another jurisdiction.  For financial management orders, new orders may be required in a new jurisdiction if the person moves.
4. The size of the settlement and the investment options available to a financial manager may mean there are advantages in appointing a financial manager.

Where a substantial award is made by the common law court, an application for financial manager would be best obtained from the Supreme Court due to the Court’s ability to make a remuneration order. Note that financial management orders for people under the age of 18 years can only be made by the Supreme Court of NSW.