Safe as houses
Key points
What is the issue?
Most clients of trustees buy real estate. It is an emotional asset class, and a purchase is rarely driven by the investment characteristics of the property and how it might fit into a portfolio – yet the trustee has an obligation to understand it in this context.
What does it mean for me?
There is a clear framework for assessing real estate and understanding how it behaves in the context of an investment.
What can I take away?
A new method of assessing real estate and its financial attributes in your clients’ trusts.
For private clients, owning real estate feels secure, tangible and certain – and recent performance would seem to validate the often emotionally driven decision to invest. This has led to many trusts holding investment property and placing the obligations of ownership on the trustees. Although many trustees are experienced owners of property, they also have an obligation to understand the investment characteristics of a property and how it might fit into a portfolio, even though the investment characteristics may not have been a key consideration of the settlor at the outset.
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