You may have a family trust or a discretionary trust that your accountant prepared for you.
Perhaps you are the trustee or that trust, or one of several trustees such as your spouse or partner or perhaps you are a director of a company that is the trustee.
There are a number of terms used in trust deeds that are not commonly understood, such as the “settlor”, “vesting date” or the “excluded class”.
One of the things that is often:
- not properly considered at the time of establishing the trust; and /or
- overlooked at the time estate planning documents are being drafted
is the “power of appointment”.
The power of appointment is a power granted to the “appointor” named in the trust deed to decide who should be the trustee of the trust.
This power of appointment is the most important power in a trust deed as it generally affords the appointor the power to remove and replace the trustee as the appointor thinks fit (subject of course to any provisions of the trust deed).
Often the trust deed will provide for how that power is to be transferred, such as on the death of the appointor, and allows the appointor to give that power in their Will.
If you have a trust deed and you either:
- don’t know who holds the power of appointment;
- want to amend the trust deed to change who holds that power of appointment or
- want to ensure that the power is appropriately transferred on your death
then speak to your lawyer about this without delay.
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to trusts, estate planning, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email firstname.lastname@example.org.