Software brings relief to trustees
People are making a hash of managing family trusts, and a new "cloud- based" service aims to give them the tools to do better.
Trustworks New Zealand's service plans to be to trustees what sharemarket darling Xero is to the owners of small businesses.
Xero provides online accounting and communication systems to help business owners operate more smoothly. It has seen its share price rise from just over $3 in early 2012 to more than $38.
Trustworks aims to provide similar services for the trustees of the country's roughly 370,000 to 470,000 trusts, many of which, its founders believe, are being so mismanaged and neglected that they would not stand up to legal challenge.
The company is the brainchild of Wellington-based entrepreneur Jeremy Buckley and his business partner Nigel Keats. Xero co- founder Hamish Edwards is also a director, but does not own shares in the company.
Keats said Trustworks was created to fill a market gap - providing a system trustees could use to help them be better and more organised.
"It was Jeremy's idea," Keats said. "It was borne out of frustration with his trust and not really knowing what his responsibilities were.
"He looked for a product that manages trusts and found that there wasn't one, so in true entrepreneurial style, he set out to create one."
Customers will pay an annual subscription of between $25 and $149. In return, they get password- protected access to what is a virtual headquarters for the trust they represent.
It is a place to store records like trust deeds, minutes and resolutions, but is also a forum for the trustees of that particular trust to communicate about and pass trust resolutions, sign documents, and send each other messages.
The system has the backing of financial planner and trusts expert Martin Hawes, whose tips on how to properly manage a trust are incorporated into the software.
In his book Family Trusts, which sold more than 120,000 copies, Hawes wrote that based on his experience around 75 per cent of family trusts were being mismanaged.
It is impossible to know the exact truth of such claims, but Keats said: "No-one is disputing that there is a problem."
The results of trustee failure can be dire. "There have been a number of court cases following instances where things have gone wrong," Keats said.
The results have been trustees held liable to large losses and unpaid tax bills incurred by the trusts on which they have served.
Keats says it is too early to say whether Trustworks, which is aiming to win a following among both professional and amateur trustees, could follow Xero onto the sharemarket.
Its start-up capital has come from the two founders and Blenheim lawyer Andrew Finch.