The role of an Appointor in a Family Trust
In this VLOG on role of an appointor in a Discretionary Trust Deed or Family Trust Camille explains the importance of making sure the nominated person is the right one for the role.
What is the role of an appointor?
Discretionary trust deeds can also be called family trusts in some instances. Most trust deeds provide for the role of the appointor, sometimes this role is called the principle, or in older deeds it may be called a parent. But all discretionary trust deeds will have this role in the deed. The role of the appointor is a really powerful role, as essentially their job is to choose who the trustee is in the trust deed.
How is that different to the Trustee?
Now as you are probably aware, the trustee is the person, or entity, who manages the trust and distributes the incoming capital out to the beneficiaries. In a discretionary trust, the trustee has broad discretion how to pay out that incoming capital. So the trustee is given broad powers to handle and manage the trust deed. This means that the role of the appointor is even more important because as stated earlier, the appointor chooses who the trustee is, so the appointor chooses who manages the trust.
Why you need to find out who is the appointor?
We often come across trust deeds for clients where they’re not aware of who is appointed as the appointor. In some instances it may be the client, it may be a professional advisor, or it may be someone who helped them set up the trust deed that they’re no longer in contact with. It’s important that you get advice or get a solicitor to review the deed if you’re not sure who is appointed in this role. This is to make sure that the control of the trust and that role of appointing who the trustee is vested in the correct person. If there’s someone appointed in the role of an appointor that you do not want in that position, then they can potentially change the trustee without any authority of the trustee and then potentially get control of that trust.
Therefore, it’s extremely important that you review the trust deed or get advice on it to make sure that the correct person is appointed. If you have any questions about this article or should you need any assistance please do not hesitate to contact us at Southern Waters Legal.
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