The Trustee of a Discretionary Trust (subject to the rules of the Trust) determines which beneficiaries of the Trust receive benefits under the terms of the Trust. The Trustee can be an individual or individuals or a company. If the Trustee is a company then whoever has control of the company has control of the Trust (and therefore the benefits flowing from the Trust).
The appointor of the trust (sometimes referred to as the Custodian or the Principal) has the power to change the Trustee of a Trust. It follows that the role of the appointor is powerful. Each Trust document usually determines the procedure whereby the appointor can change the Trustee. This can be done whilst the appointor is living. However, if the appointor dies whilst remaining appointor of the Trust then it usually follows that the legal personal representative of the deceased appointor becomes the appointor. It is then open to him or her to change the trustee and in doing so enable the new trustee to provide benefits to beneficiaries who would not otherwise have benefited under the trust.
So for example in a blended family, the appointor may have children from his or her first marriage and a second spouse. If the appointor also has control of the Trust then the Trustee can deliver benefits to the children from the first marriage as well as the second spouse. However, if the appointor dies and the Will does not provide for a replacement appointor or if a replacement appointor has not been appointed prior to the appointor’s death) then the legal personal representative of the deceased appointor shall become the appointor and remove the existing trustee of the Trust. It can be seen that this could be detrimental to the children from the previous marriage or to the second spouse if everyone does not get on. The message is that if you are the appointor of a discretionary trust it is important that you inform your solicitor at the time of making your Will and ensure that a replacement appointor is appointed in the Will.
Liability limited by a scheme approved under Professional Standards Legislation
