Discretionary trusts – what happens with the assets in the trust when you die?

If you are the trustee, or have another position of power for a discretionary trust, then it is important that you take steps to have your affairs in order before your passing.  It is crucial that you obtain legal advice to have an effective will drafted which is tailored to your unique circumstances.

Having your affairs in order is imperative as trust assets do not form part of your estate, which means your Will can’t gift or otherwise deal with the ownership of those assets.

Instead, the trust deeds must be reviewed in conjunction with an appropriately drafted Will to ensure that you are properly passing control of the trust and the trust assets.

How you pass control of the trust and the trust assets depends on the specific terms of your trust deed.  The trust deed must be reviewed in full to determine whether the succession of the appointor role is covered within the deed itself, must be dealt with in your Will or by a separate deed.  The succession of the trustee role must also be carefully considered, especially if there is no appointor role provided for in your trust deed and, if necessary, preparation of amendments to the terms of the trust deed.

Clients are often surprised that they can’t leave assets held in their discretionary trust in the way that they wish.  It is therefore important that you are consider your future testamentary intentions when establishing a trust as well as when purchasing assets in the trust.

It is imperative that your advisors review your trust deeds when working through your succession plan to ensure that your testamentary wishes can be carried out.

The solicitors at Macrossan & Amiet are experienced in succession planning and the review of trust deeds for this purpose.

If you have a discretionary trust but have not prepared a Will then please get in contact with our office to make an appointment.