I often see discretionary trust deeds which nominate the next appointor, upon the death of the current appointor, to be the Legal Personal Representative (LPR) of the last appointor upon their death. On death the LPR of the deceased is the executor or administrator of the will. This is a bad idea! Example Homer has set up a trust without getting legal advice. Homer is the sole appointor of the trust and there has been no thought given to what happens after his death. The deed is worded in such a way that the LPR of Homer will become the next appointor. The trust holds assets of approx. $2mil when Homer dies. What could happen? 1. Homer’s will appoint his mate Barney as his executor – Barney is now appointor of the trust and removes the current trustee and appoints a company he controls, or 2. Homer’s nominated executor refuses to act and it ends up being the public trustee that becomes the LPR. They would immediately remove the trustee and appoint a trustee that they control. This would be much safer than Barney being in control, but they may have different ideas on who can benefit from the trust, or 3. Aunt Thelma could be the only one that applies for Administration of Homer’s estate as he died without a valid will. She is the LPR. Now she is the appointor of the trust. She is also a beneficiary of the trust and the trust deed permits the trustee to act even though there may be a conflict of interest. Thelma could milk the trust and benefit herself at the expense of Homer’s children 4. More practically speaking, the LPR is only appointed once the courts have granted Probate or Administration. This could take 6 months of more. So until this happens the trust will be without an appointor. If the deceased person was the trustee or the sole director and shareholder of the trustee company the trust will be under no one’s control until the LPR is appointed. This means no access to bank accounts, no ability to make a beneficiary presently entitled to income, of it crosses the end of June, which means the top marginal tax rate on all trust income. Any sales of property won’t be able to happen, contracts entered into may not be able to be completed – litigation potentially resulting. Solution – seek legal advice about appointing a successor appointor now, via a separate deed. If the trust deed doesn’t allow this, seek legal advice on having the deed amended to allow it. Keep any clause relating to the next appointor being nominated in the will as a back up, and avoid having the LPR being the next appointor.