Are Your Clients' Family Trusts Aligned with Their Estate Plans?

Advisers managing clients with family discretionary trusts must understand a critical distinction: while clients may control trust assets, they don’t technically "own" them. This impacts estate planning, as trust assets fall outside their personal estate.

As an adviser, it’s crucial to guide your clients through two key levels of control. Firstly, as trustees, they manage trust assets according to the trust deed—not their will.

Secondly, appointors hold the power to appoint or dismiss trustees, which influences long-term trust management.

If a trust deed hasn’t been updated in over 10 years, it may not comply with current laws or reflect family changes like births, deaths, or marriages. Outdated deeds can create tax inefficiencies and legal complications, making regular reviews essential for your clients’ peace of mind.

Action Steps for Advisers:

• Assess who holds key roles like the appointor and guardian.

• Ensure beneficiaries are consistent with those named in the client’s will.

• Discuss potential tax and asset protection implications with your client’s legal team.

• Recommend trust deed updates where necessary to avoid legal pitfalls.

  
  

Note: Always consult with a lawyer before making any changes to a family trust deed or estate plan to ensure compliance with legal requirements and protect your client’s best interests.

Inherit Australia provides advisers with a structured estate planning facilitation process to ensure that client interests and wishes are maintained as part of their estate plan.