What happens to family trusts / discretionary trusts upon death?
There may be a number of potential tax benefits to family discretionary trusts, but these instruments can give rise to complications upon your death.
When it comes to estate planning, it is important to understand that the assets in your family trust won’t necessarily be dealt with in accordance with the terms of your will. Rather, it will be the trust deed (not the will) that is the operable instrument.
Family discretionary trusts are “discretionary” in that the trustee is able to decide how the income and capital of the trust is distributed amongst the beneficiaries. The class of beneficiaries in a family discretionary trust includes, not just spouses and children, but also more remote relatives and in-laws.
When you die or loose the capacity to operate your trust, someone else will succeed you in that role. Your successor may then appoint a trustee that chooses to distribute trust income and assets in a manner that is inconsistent with your preferences.
It is therefore essential that your estate planning includes careful consideration of who will gain control of your trust upon your death so you can have some confidence that the income and assets of your trust will be dealt with in accordance with your wishes.
At East & Associates, we can review your existing family trust instruments, advise you on amendments you may wish to make to your trust, and carry out any amendments.
Office address: 185 Railway Parade, Maylands WA 6051
Email: terrence@eastandassociates.com.au
Tel: 0403 632 777
