SMSF Update | November 2024
This session provides a comprehensive overview of key updates from the superannuation sector over the past six months, along with practical strategies to effectively support your clients. […]
Emily Pritchard, current as of: 2 August 2022.
The role of the Appointor in a discretionary trust, and questions as to who should hold this position initially and into the future, often give rise to conflicting advice. What is essential, above all else, is a trust deed that provides the mechanisms for changing Appointors and managing Appointor succession in the desired manner.
In light of the varying approaches taken to Appointor change and succession, it is useful to highlight the role of the Appointor and outline how the Acis deed accommodates multiple approaches to succession planning in relation to that role.
The Appointor is the position in a trust that generally has the power to remove a trustee and/or appoint new trustees. Some trust deeds also require that the consent of the Appointor is obtained when the trustee intends to carry out certain powers afforded to it under the trust deed.
The role is significant because it effectively controls the trust by controlling the identity of the trustee. As a result of that “ultimate” control, it is important that succession planning is considered when determining who will act as the Appointor of a trust.
To address this requirement, the Appointor provisions in the Acis deed are extensive and provide various mechanisms to deal with different scenarios, ensuring that the position is always filled.
What happens when an Appointor resigns?
What happens when an Appointor dies or loses capacity?
What happens when the Appointor is removed, other than in the cases of death or incapacity?
An Appointor is also removed in certain circumstances, other than death or incapacity, such as events surrounding bankruptcy or liquidation.
Other important points to note about Appointors in the Acis deed.
Case Study #1
A discretionary trust is established adopting the Acis deed. It names John Smith and Mary Smith (husband and wife) as the Appointors. It also names their son (Jarrod Smith), their son’s wife (Melanie Smith) and their daughter (Jane Smith) as the Alternative Appointors of the trust. The following happens (chronologically in the order listed):
The provisions of the trust deed work to ensure that John and Mary maintain the “ultimate” control of the trust whilst they are alive and able, and that they can control and change those that will replace them as their circumstances change.
Case Study #2
A discretionary trust is established adopting the Acis deed. It names Edward and Amelia Jones (husband and wife) as the Appointors. The following happens (chronologically in the order listed):
The provisions of the trust deed work to ensure that, despite there being no Appointor and no nomination made for a replacement, the role of Appointor is not eternally vacant.
Notes:
Above all else, this is another case of making sure that your trust deed allows the actions that you intend.
In terms of the Acis deed, you have the security of knowing it contains multiple mechanisms that allow you to do what you need; however, don’t assume that every deed has the same mechanisms and operates as effectively.
You may want to consider having old deeds amended, particularly if they are not Acis deeds. Feel free to contact us with any queries.
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