Trustees: Appointments for the Future
There are many important matters to consider when preparing your Will. The question of “who will receive your estate” generally prevails over other considerations. However, it is important to be aware of the implications associated with the roles and the suitability of those whom you are appointing. In this article, we will discuss the implications of nominating a trustee.
A trustee is an individual who manages or controls an asset for the benefit of another. The individual receiving the benefit is known as the beneficiary.
Important matters to consider when appointing a trustee:
Age: As the trustee may not act for a number of years, it is important to consider how the appointee may manage the requirements of their role in future. Naturally, the age of the potential trustee does not contribute to their ability to act in this capacity, it is more the practical implications and the potential stress that this role can cause. For example, if your trustee is entering retirement with plans to travel, it may not be appropriate to appoint this person.
State of health: The potential burden and stress that is experienced by a trustee may have adverse impacts on their health. You should consider if your trustee has any conditions which may create additional challenges for them to fulfil their legal obligations in connection with the role.
Familial ties: Although the natural selection for a trustee may be to appoint a sibling or other familial relation, you need to consider the implications of the trustee acting in accordance with their duties. For example, if a beneficiary has an issue with substance abuse or addiction, this will inherently create tension between the siblings when the beneficiary requests funds and such requests are denied by a trustee acting in accordance with their duties.
Relational: Appointing a trustee who you are currently close with may seem like a perfectly rational exercise. However, it is beneficial to consider how your trustee and the beneficiary interact. This is particularly important in the case of a disability trust. The appointment of a trustee is very serious in this instance, as they may be expected to arrange finances and provide continuing emotional support to the beneficiary. However, this position may be tested when the appointor is no longer present within the relationship.
In a perfect world, we would expect that a trustee will continue to act in accordance with the appointor’s desires. However, with the passage of time and unforeseen circumstances, the trustee may not be able to fulfill this role.
There are a variety of circumstances that must be seriously considered prior to creating appointments under your Will. To prepare your Will and discuss the implications of the appointments further, please contact our office on (02) 4929 2000 to arrange an appointment with Sally Davies.