Family Trust Update – Appointor, Trustee & Deed Update

Update Family Trust for – Trustee, Appointor & Deed Update

Build this Family Trust Update to:

1. change your Trustees (if relevant)
2. change Appointors & Guardians (if relevant)
3. fully updates your Trust Deed (rules)

1. Update Trustee?

1. Trustee retires
2. Appointors sacks a Trustees
3. Go from a corporate Trustee to a human trustee
4. Go from human to a corporate Trustee (company as trustee)
5. Want a single Trustee only
6. Trustee dead, gone bankrupt or insolvent

2. Why update Appointor?

Appointors change for many reasons. People may wish to retire as an Appointor. Perhaps you would like to add your spouse as an additional Appointor. This Deed of Variation:

* allows the current Appointors and Guardians to retire or removed if dead
* confirms those current Appointors who remain as Appointors appoints any new Appointors

Example: Mum and Dad are the Appointors. Mum dies. Dad continues as the Appointor. Dad is happy to control the Family Trust by himself. Nothing in the Trust Deed or Mum’s Will states anything different. Therefore, all Dad is doing here is formally removing Mum as Appointor. Mum’s executor or next of kin signs on Mum’s behalf. The Family Trust may have a system or procedure for dealing with dead Appointors.

Trustee vs Appointor

Who is in charge? Is it the Trustee that ‘owns’ the assets? No, the Appointor is god. The Appointor bosses the Trustee. The Trustee looks like it is in control, as it has the assets in its name. However, the Trustee takes it marching orders from the Appointor. The Appointor can sack the Trustee on a whim, for no reason at all. For example, the Trustee has nothing to do with this Deed of Variation. The variation relates to the Appointors only. The Trustee is not even party to the Deed of Variation.

Appointor, Guardian, Principal, Controller and other names for ‘god’

The wonderful thing about trusts is that they suffer very little meddling by the government. You are free to put into your trust deed pretty much anything you want. (That is why it is important to have a specialist law firm, like Legal Consolidated, prepare your trust deeds.)

There are two main persons in a Family Trust: ‘controller’ and the trustee. The ‘controller’ of the trust acts like a god. It can do whatever it wants. It ‘controls’ the trust. Depending on who prepared your Family Trust deed the ‘controller’ may be known by many different names:

  1. Appointor
  2. Guardian
  3. Appointor and Guardian
  4. Principal
  5. Governor
  6. Controller
  7. Trustee (this is very uncommon, except for Deeds older than 1972)

Can the Appointor be BOTH mum and dad?

Yes, commonly mum and dad are each an Appointor together. You can have as many Appointors as you wish.

You can also have as many Back-up Appointors as you wish. The Backup Appointors are generally your children: ‘the union of Dad Full Name and Mum Full Name’.

Can the appointor be a company?

It is becoming more common to set up a company as a dedicated Appointor of a family trust. So, for example, mum and dad remain as Appointors, in the first instance. The company is the Back-up Appointor. You and your spouse own the shares in the company. (Obviously, the shareholders have ultimate control of the company, not the directors.) When you and your spouse die (i.e. once the Appointors die) your children inherit the shares in the Appointor company. Your children, get everything equally in your Will and therefore control the family trust via the control of the shares in the Appointor company. (This is an exemption to the rule that a Will should not control the family trust.) Commonly you would also have a Shareholders Agreement to lock in the rules. If the beneficiaries getting the shares are minors then the executor(s) in mum and dad’s Wills control the shares (and therefore the assets in the Family Trust). They can only act in the best interests of the minor children. (Whether you have a 3-Generation Trust Will the position is the same.)

To follow this strategy you and your spouse remain as Appointors. Your company is the Back-up Appointor.

Should a Will, 3-Generation Testamentary Trust or Testamentary Trust ‘control’ my Family Trust?

It is wrong and foolish to allow your Will (or any trusts formed under your Will) to control the succession of your Family Trust. The only way that you should update or direct who is the controller of your family trust is via a Deed of Update. This is the document you are about to start building. Just press the blue-button above to start the process. Read the hints as you build the document.

3. Why a Family Trust Update?

Just like your car, a Family Trust Deed needs updating and servicing. As well as updating your Trustees and Appointors we also update:Complete Family Trust Deed Update

  1. Streaming – franking credits, Attribution and separate accounts to reduce CGT & income tax, complies with Thomas v FCT [2017] FCAFC 57
  2. Bamford’s Case – definition of Net Income – satisfies ATO
  3. Loss Recoupment – retain and stream losses to particular beneficiaries
  4. Appointors to act unanimously – so two Appointors can’t take the assets over the 3rd Appointor
  5. Bank loans to the Family Trust – the required bank clauses and Indemnity rights (CBA, St. George, NAB, ANZ, BankWest, AMP, QLD, Macquarie, Citibank, ING, Bendigo, BankOne, & Westpac)
  6. Bank loan Compliance Certificate on our law firm’s letterhead

What categories are required for Bamford streaming?

Have a look at our ‘Sample document’ above. We have developed a unique group of categories with open classes for streaming. This list is based on the ATO audits we have attended and our legal research.

Categories a category, character, type, class, part, item or source, including (but not limited to) the categories: Net Capital Gains, Net Capital Losses; gains, profits or any losses of capital or of a capital nature treated as assessable income or allowable deductions under the Tax Act for the Trust Income for any Financial Year; gains and profits or any losses of capital or of a capital nature that are not treated as assessable income or allowable deductions for taxation purposes for the Trust Income for any Financial Year; any income, receipts, gains or profits or any losses, disbursements or outgoings of income or on income account that are or are treated as assessable income or allowable deductions for taxation purposes in relation to the Trust Income for any Financial Year; any income, receipts, gains or profits or any losses, disbursements or outgoings of income or on income account whether treated as assessable income or allowable deductions for taxation purposes for any Financial Year; any income, receipts, gains or profits that are exempt or otherwise not liable to tax under the Tax Act or any other act or regulation; Franked Dividends; Unfranked Dividends; any foreign income, foreign income tax credit, other tax credit, interest; any royalties, minors and others with proceeds from deceased estates, superannuation funds and life insurance and additional categories set out in any minutes
* Plus, categories mentioned in any Australian Taxation Office publication, from time to time; and
* any combination or part of the above

Unsure whether your Family Trust Deed needs updating? Speak to your Accountant or Financial Planner. They can email us a copy of your Trust Deed for us to look at, at no charge.

Press the ‘Sample document’ button to see the Family Trust Update. There are training videos and hints to help you as you build the Family Trust Update.
See also:

Update the Family Trust for Bamford streaming only:

legal consolidated

Or, update Bamford streaming PLUS update the rest of the Deed:

Or update for Bamford streaming PLUS the Deed PLUS update the Appointor & Trustee:

Or just update the Trustee:

Or just update the Appointor:


To set up a new Family Trust Deed:

To prepare the Annual Trust Distribution Minutes:


To deal with Division 7A (loan or UPE from your company to the Family Trust):

Or, to forgive the ‘loan account’ and UPEs (loans from humans to Family Trust):


Change the name of your Family Trust:

To wind up and vest the Family Trust, when you no longer want it:

 

For more legal advice telephone us. We are a law firm. We can help you answer the questions.


Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
Australia wide taxation and trust law firm
Mobile: 0477 796 959
National: 1800 141 612
Email: [email protected]
Skype: brettkennethdavies


06/05/2016

Family Trust Update – Appointor, Trustee & Deed Update

Update Family Trust for – Trustee, Appointor & Deed Update Build this Family Trust Update to: 1. change your Trustees (if relevant) 2. change Appointors & Guardians (if relevant) 3. fully updates your Trust Deed (rules) 1. Update Trustee? 1. Trustee retires 2. Appointors sacks a Trustees 3. Go from a corporate […]