A Will does not generally control assets held in a discretionary family trust. A trust is a separate legal structure, and the assets are owned by the trustee on behalf of the trust rather than by an individual personally.
As a result, family trust assets are usually not dealt with under a Will.
So what happens when a person who controls a trust dies or loses capacity?
The outcome depends entirely on the terms of the trust deed.
Most family trusts include roles such as a trustee and an appointor or guardian. When a key controller dies or loses capacity, control does not end – it transitions in accordance with the rules set out in the trust deed.
In most cases, the trust continues to operate. The change is in who controls the trust, not ownership of the assets themselves.
This is why succession planning within a trust structure is important. If the trust deed does not clearly set out how control is to pass, the outcome may be uncertain or not aligned with the original intentions when the trust was established.
A Will and a family trust operate separately and should be considered together as part of an overall estate planning structure.
Reviewing the trust deed is essential to understand how control would pass in each individual circumstance.
We can help you to review the specific terms of your trust deed and help you put in place a trust succession strategy that suits your family’s circumstances and goals.
Book a free chat with us today to discuss your family trust succession arrangements and put in place a plan to protect your family’s future.
We are experienced Wills and Estate Planning lawyers based in Prospect and work with families across Adelaide to help you put in place an Estate Plan that reflects your values and gives you confidence about the future.