Family Trusts

Farmer Freddy


Hi Dad”, said Pebbles as she walked down the driveway to the farmhouse. 

“Hi Pebbles”, said Freddy.  “I was just about to call you.  I was talking to my solicitor about the family trust that we set up a few years ago.

“As you know, I am one of the trustees of the trust but my solicitor also said that I have what’s called a power of appointment.  I thought that it would be a good idea to have a talk to you about it.”

“Sure”, said Pebbles.  “A trust deed will usually record who has power of appointment of trustees.  It is one of the most important aspects of a trust deed as the power of appointment will usually determine who has the ability to remove or appoint new trustees.  As you are aware, it’s the trustees who have the power to make decisions in respect of the trust, how the trust fund is administered and any distributions from it to beneficiaries.”

“Yes that is right”, said Freddy.  “My solicitor said I need to think about passing on that power of appointment to somebody else in my will so that if something happens to me, then that person will have the power of appointment and not somebody else.”

“That’s correct”, said Pebbles.  “Typically, if you do not nominate someone else, then the Trustee Act 1956 will apply and that sets out who can appoint trustees, but it is better to nominate someone rather than leaving it to the default provisions under the legislation.”

“So, what happens under the legislation if I don’t nominate somebody?”, asks Freddy. 

“Well”, said Pebbles, “the power of appointment will usually be vested in the surviving trustees.  But if they don’t appoint anyone then it will vest in the personal representatives of the last surviving trustee that being the executors named in the will of the last surviving trustee.”

“That might not be a very good outcome”, said Freddy.  “I had better put something in place so that I know that the right trustees will be appointed in the event that something happens to me.”

“Yes”, said Pebbles, “it is good to review the structures that are in place from time to time.  With trusts, it is particularly important as they can continue on beyond the death of the person who originally set them up.  It is therefore important to give thought to who will continue to administer and operate a trust in the long term if the intent of the person setting up the trust is that it is to continue on beyond that person’s death.”

The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document. 

If you would like more information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser. 

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Jeremy Hucker