Legal Tip 60: Appointor Roles in Trusts

Appointor Roles in Trusts


In most modern discretionary trusts there is a role known as the Appointor - sometimes also called the Principal.


The Appointor usually have various powers relating to the power to add a trustee to the trust and to remove a trustee to the trust. The person or persons controlling the appointor position therefore are the controllers of the trust.


Extra special super care is needed as to who will be the next appointor on

death of the current appointor

incapacity of the current appointor

bankruptcy of the current appointor

domestic relationship breakdown of the existing appointor


Very few people consider the consequences of any of the above and not many people who have already set up trusts can tell me when asked what happens to the trust when they die.


Each trust deed will be different so who the next appointor will be, if any, on any of the above will depend on the deed.


Where you are the appointor of a trust and have named a successor appointor in the deed it is best to tell this person as after your death they may not know they have the power of appointment of the trust. I had one client whose father died and left him, the son, as appointor. But the mother controlled the position of trustee. After she died someone else controlled the trustee and it was about 5 years or more before the client know he was the appointor. He complained that ‘they’ didn’t tell him, but know one had any obligation to inform him at all. The trust assets had largely been depleted by this time.

 

@Terry_w thank you for the information. What will happen if the trust doesn't have a successor appointor? Who will become the appointor when the current appointor dies?

 

It will depend on how the deed is structured. I have seen trusts where the trustee becomes the appointor and others where the legal personal representative of the last appoint becomes the appointor - would you want the Public Trustee to control your trust? The very first thing they would do is to sack the existing trustee.

 

Thanks Terry. I better go back and check the deed. I can't remember if my trust has a successor appointor.