The second of the four key questions – what do I control?
Many farms own land and other assets in trusts for succession planning efficiency, asset protection, or tax minimisation purposes. In a trust structure, the trust owns assets which remain in the trust after death or retirement. Control of the trust usually equates to control of the assets in the trust, so understanding whether assets are owned in a trust, and how control of the trust should be transferred, is extremely important.
Each trust is different, but most have common elements.
What is a Beneficiary? All trusts have Beneficiaries, who generally are passive potential recipients of trust income and capital.
What is a Trustee? All trusts have a Trustee, which manages the assets of the trust, and decides whether to distribute income and capital to beneficiaries. A Trustee can be one or more people, or a company. If a company is the trustee, then clarifying the shareholdings and directorships of the company is important when considering estate planning issues.
What is an Appointor? Not all trusts have Appointors. The role of Appointor (sometimes known as Guardian, or some other name) is to control the Trustee, and to fire and replace the Trustee if the Trustee does not act pursuant to the Appointor’s wishes. Accordingly, the role of Appointor is extremely powerful and important.
Next steps? Reading the trust deed to understand who is the Trustee and Appointor, and what happens if the Appointor dies or loses capacity, is key to understanding who controls the assets in the trust on death or retirement.
This is the third in a series of 6 articles on farm succession planning that aim to help you start the process to ensure an efficient transition of your wealth to your intended beneficiaries.
There are further resources available on our website. If you have any questions or if you would like to start the planning process, contact Trent McGregor today in Bendigo on 5434 6666 or Castlemaine on 5472 1588.
Wills & Estate Planning Lawyer