10 Reasons to Change Trustees

With the increasing complexity in accounting and tax regulations, choosing the right trustee to manage your company’s financial affairs is crucial for its success and wellbeing. However, too often you may end up feeling stuck with a trustee who doesn’t provide the type of quality service that you and your business deserve. In this article, we delve into the top ten reasons why you might consider transitioning to a new trustee, along with the benefits that a good trustee can offer.

The term “trustee” is often associated with the specific person who acts as a custodian for the assets held within a trust. However, the German term “treuhand”, which is roughly translated as “trustee” or “fiduciary” in English, is a somewhat broader term which refers to various types of fiduciary relationships.

The key feature of a trusteeship is that the trustee is given permission to act on behalf of their client in matters ranging from asset management to bookkeeping and filing tax returns. The trustee has a legal responsibility to act in the best interest of their client, with honesty and transparency. While such a fiduciary relationship is usually formalised through legal and contractual means, it is important for the client to have confidence in the integrity and competence of their chosen trustee.

Common responsibilities of a trustee in Switzerland include:

• Providing sound legal advice.
• Giving tax advice and managing all the legal aspects of tax compliance including filing tax returns, registering for VAT, corresponding with the tax authorities, etc.
• Accounting and bookkeeping services.
• Managing a company’s payroll.
• Conducting audits for their clients.
• Asset management.

There are many reasons why you might want to consider changing your current trustee. Here are the top ten:

1. Lack of expertise

Performing the duties of a trustee requires a high level of expertise. A trustee is required to take care of many vital tasks which involve managing assets, ensuring regulatory and tax compliance, and keeping the books of the business accurate and up to date. Furthermore, tax laws and accounting regulations are complex and constantly evolving. A competent trustee should stay up to date with these changes and have a deep understanding of how they apply to your specific situation.

If you find that your current trustee is unable to properly answer your questions, cannot perform all their duties with competence, or is not knowledgeable about the latest regulations, it's a clear indicator that you need to consider finding someone who is better qualified.

2. Inefficient management

Your trustee may be managing assets and making investment decisions on your behalf. If they consistently fail to manage your assets effectively and make poor investment decisions, or are not responsibly overseeing properties or other assets, a change might be necessary.

3. Poor communication and lack of transparency

A good trustee should always be accessible and communicative. If they become unresponsive or dismissive of your concerns, you need to look elsewhere. You may also feel frustrated by your trustee if they fail to keep you informed of your affairs with clear documentation and transparent reports. A clear lack of transparency from your trustee is definitely grounds to terminate your relationship.

4. Conflicts of interest

Your trustee should always be impartial and neutral when making decisions on your behalf, to act rationally for your best interests. If there arises a situation where your trustee stands to personally gain or lose based on decisions related to your business, this creates a conflict of interest which puts your company at risk. In this case, you may be better off finding a new trustee who is not personally invested in your business and investment decisions.

5. Excessive fees

While professional fiduciary services do come at a cost, they should not be unreasonably high, especially when compared to industry standards. It is important to understand that a higher rate doesn’t always equate to a better service. After all, a good trustee should be saving you money in the long run, not placing an added burden on your business. If you are concerned that your trustee is charging you exorbitantly high rates that don’t match up to the quality of service provided, it’s time to consider looking elsewhere for a reliable and cost-sensitive trustee.

6. Inaccurate calculations and record keeping

Your chosen trustee is responsible for handling some of your most critical business data and financial records. It is essential that all calculations are meticulous and your financial reports are kept up to date and accurate. If your trustee makes frequent errors in calculating your annual returns, handling your accounting data, and conducting your payroll, it would be better to find someone who is more competent and careful.

7. Lack of personalised advice and proactive planning

In today’s fast-paced and complex business world, the role of a good trustee encompasses so much more than just mechanically filing your tax returns and completing your annual reports. The right trustee should act as your strategic financial planner, business advisor, and tax optimiser. They should be giving you advice which is tailored to your situation and objectives, and actively help you find ways to increase your profits, maximise your investment returns, reduce your costs, and minimise your tax liability through legal optimisation strategies.

Any trustee which doesn’t go that extra mile to help pave the way to success for you and your business is one that is not worth your time and money.

8. Changing needs

Over time, the nature of your business and your corresponding needs may evolve. If your current trustee no longer has the expertise to manage your changing needs effectively, you may need to upgrade to a trustee which offers a wider range of services and has greater capability to handle your requirements.

9. Ethical concerns

Your trustee is involved in dealing with your sensitive financial and tax matters. It is therefore crucial to work with a fiduciary you know you can trust. If you are concerned that your current trustee is engaging in any unethical or illegal practices, such as providing advice which seems to contradict the law, or not taking the proper steps to ensure you are compliant with tax and accounting regulations, you should act immediately. Such unethical behaviour can put you and your business at serious risk. Finding a moral and law-abiding trustee to safeguard your financial wellbeing is therefore of the highest importance.

10. Analog working methods

If your fiduciary still asks you to send in physical receipts and documents, you are probably in need of a change! The days of manual paperwork are long gone, and any modern and up-to-date trustee should have digitised their services by now.

With digital tax and accounting services, you can directly synchronise your company’s internal accounting system with your trustee and thereby transmit important data in real time. So, if you have not yet done so, make sure you find a good trustee where digitalised service is standard.