Expansion of the Public Trust Office.

Franklin Times, Volume XXIV, Issue 126, 2 November 1934, Page 6

Expansion of the Public Trust Office.

OVER QUARTER CENTURY. ESTATES UNDER ADMINISTRATION. i VALUED AT £60,760,493. The expansion of the Public Trust Office over the past twenty-five years is shown by the following table appearing in the annual report recently published. This table gives the value of the estates and funds under administration at five-yearly intervals:—

“The figures contained in the report afford ample evidence of the continued confidence of the people of the Dominion in the services rendered by the Public Trust Office, and constitute convincing testimony to the satisfactory performance of the duties undertaken by it,” the Prime Minister, the Rt. Hon. G. W. Forbes, states in reviewing the report. “Its future development on a sound basis is assured,” he adds.

Prudent Investments

. Of’ particular interest to the persons beneficially interested in moneys invested in the Common Fund of the Public Trust Office is. that portion of the report which deals with the investment by the office of the moneys constituting the-fund. It-is evident that the investments have been made prudently and oh a conservative basis and that a wider margin of security has been obtained than that which a private trustee is permitted by law to accept' when investing trust funds. The'policy of granting loans on an instalment basis under which the principal is gradually repaid from year to year has been an additional, factor making for the safety of the, moneys invested, on mortgage, and the effect of this policy, allied to the prudent investment of the funds, is observable from the results obtained.

The report shows that the number of wills on. deposit in 1925 was 44,102, in 1930 and in 1934 81,403.. ' • , • The report continues:- —

The primary function of the Public Trust Office is the .administration of estates and funds and the performance of fiduciary work of a similar' character, and /it is from these duties that other important functions of the Office, such as that of investing funds, are in the main derived.' Naturally, the Office, with its large and constantly growing business, its long and varied experience, and its wide representation throughout the Dominion, is, able to offer to its clients special facilities for the performance of the vari-' ous classes of w r ork which it undertakes, and to provide an assurance of faithful and efficient service. The continued and increasing resort of the public to its services, as demonstrate ed by the figures already given, sufficiently indicates that the work is performed to the satisfaction of clients. Considerable Responsibility.

Even in times of general prosperity the administration of such a large aggregation of trust estates' is one of considerable responsibility. The administration of trust estates is highly specialised work, calling for a technical knowledge in law and accounting, a wide and diversified experience in business matters, and other important qualifications. The assets comy ing under the' care and control of the Public Trustee cover the whole range of property rights and interests, and include investments of every description. Moreover, each estate is a separate entity with its own special problems and requirements. , The problems encountered in the . ordinary course in the discharge of trustee duties become greatly intensified in times of difficulty such as the present, and the amount of work entailed in the administration of estates is increased to a considerable extent. The present absence of demand for many classes of assets, and in particular landed properties, at prices acceptable .to the beneficaries means that the administration of many estates is a more protracted process now than it was in past years, when conditions were more favourable. As a result of this, a greater amount of work has necessarily to be performed for the estates The nianagement and control of the individual assets and their utilisation to the best advantage has also become a matter of increasing difficulty, particularly where they involve the supervision of estate mortgages, the leasing or letting of landed properties, the management of farming operations, or the conduct of businesses. Greater, difficulties are afso encountered in the

Protection of Assets. j collection of payments from tenants, mortgagors, and others indebted to estates. Applications from such parties for concessions are numerous, and careful investigation is necessary to ensure that the interests of the estates are protected to the fullest extent, bearing in mind the fact that those dependent upon the estates are often in no better circumstances than those who are seeking relief from their obligations to the estates. In considering these applications each case is dealt with individually, and, in consultation with the persons beneficially interested, an endeavour is made to arrive at arrangements which, while assisting applicants genuinely in need, are consistent with the Public Trustee’s duty to protect the assets under his control and the interests of those who are beneficially entitled. All these factors have contributed to a consdierable growth in the work involved in the administration of estates and funds, and the staff has been called upon to shoulder increasing burdens of work and'responsibility. By careful attention to the organisation of the work it has been possible to cope with the increase without, a corresponding growth in the expenses of management and without either curtailing the services rendered and facilities provided dr increasing the scale of. charges for the Public Trustee’s services. There has been no relaxation of the safeguards adopted to ensure that the interests of the estates and beneficiaries are adequately protected, and these 1 have been increased and strengthened whenever it has been thought advisable to do so to meet any special requirements arising out of the existing, conditions. v '

“The Public 1 Trustee acts as Commissioner: of a large number of the sinking funds established in connection with loans raised by local authorities in the Dominion,” continues the report, and for the most part the sinking funds have been invested- in the common fund of the office pending the maturing of the loans to which they relate, though in a few cases they were at the instance of the local bod-’ ies invested in separate' securities outside the common fund:The original loans to which -the sinking funds, relate were for the most part repayable in one sum at a given date, and each sinking fund was consequently repayable in one amount on the maturity of the related loan. In many of the conversion operations provision is being made for the redemption of a certain number of the new debentures each year, and the Public Trustee has been asked to assist in the conversion of the loans on this basis by. agreeing to the release of a portion of the sinking funds each year. Careful consideration has been given to every such request to ensure that an undue strain, will not be imposed upon the finances of the Office in later years by consenting to the release of sinking funds to a large aggregate amount in advance of the times originally fixed and allowed for in the investment policy of the Office. It has been possible, however, to meet the wishes of the local bodies substantially, and much ; has been done in this direction to assist the conversion operations in respect of localbody indebtedness without prejudicing the interests of the Office and of those whom it represents. Further assistance has .been given in the release of portions of the sinking funds invested in the Common Fund to discharge the premiums payable on conversion and the expenses which have to be met in connection with' the conversion operations, and in the adjustment of : the loans where the Public Trustee is both lender and Sinking Fund Commissioner.

.i Difficulties Less Apparent.

During the year funds came to credit much more freely than was the case in'the previous two yfears, and the difficulties encountered in ' those years in financing the operations of the Office and of the estates under its control were not ■ so manifest. Theposition, however; is still far from normal; 5 and" although new business totalling nearly £5,500,000 was accepted ' for administration - no material increase was shown ini the amount of commissioh and other earnings. This was due to the failure’.'of the propertymarket to improve sufficiently to enable estate assets , to be • realised at satisfactory prices, the lowered rental value of land properties, and the reduced revenue derived from estate mortgages. These factors, together with the general lowering of investment interest-rates,*; had- the. effect of* reducing considerably the receipts on which commission is chargeable. Expenditure was kept under close review, but the growth of the busi-, ness and the greater amount of work involved in protecting assets and in collecting income made it impossible to effect any .reduction. With the.

difficulties encountered it is satisfactory to record that after making substantial provision: for .bad and doubtful debts a profit of £i,318 for the yearwas recorded 'after payment to theConsolidated Fund of the 1 salary* reductions 'effecteid by ,the Finance 1 Act, 1931 (No. I,) , amounting- to: £23,121. The investments completed during the year, totalled . £1,139,996. On March 31, 1934, the investments, held by the Office, including special invest- V ments held on' behalf of estates and. funds, t0ta11ed..£36,468,207.,.

1909 . . . 6,399,567 1914 . . . 12,282,883 1919 . . . 19,242,347 1924 •. . . 32,404,724 1929 . . . 48,334,790 1934 , . . . .. 60,760,493