succession ownership within a disc trust

[graisme]

hi all
can anyone give me a heads up on the ownership of a property owned by a trust with a company trustee upon the death of a member?

if there were only two parties listed as beneficiaries of the trust, does the ownership of the property become the sole property of the other party in the trust? or do the deceased person's beneficiaries have a claim over the property?

common sense would indicate that the beneficaries of the deceased persons would then have claim over that property but just checking.

another issue; do the beneficaries then incur a stamp duty/cap gains issue?

thanks all

 

[Joe D]

For a discretionary trust, the trustee determines (at their discretion) what happens to the assets in the trust. Given that it has a corporate trustee, the director(s) of the Trustee Company make that decision.

It is my understanding that the beneficiaries of the estate of a deceased beneficiary of the trust are not necessarily entitled to anything. It will all depend on the Trustee.

Part of the reason for having the trust in the first place.

 

[klublok]

For the sake of completeness (and a bit of protection) you might want to pass the APPOINTOR role onto the person whom you want to inherit the trust assets. The appointor is the person who has the power to hire and fire trustees.

As you may be aware, assets in a trust are NOT part of the estate.

Some trust deeds will say that the appointor's LEGAL REPRESENTATIVES (ie: the executors of your will) are the new appointors. Some trust deeds will say that the trustees are the new appointors, some trust deeds will say that the PRIMARY BENEFICIARIES will get to pick the new trustees and appointors - you will need to check your trust deed to see how the succession takes place.

This might be small details, but it could save your estate significant legal fees from contests etc. For instance, there is a case where a person appointed his brother to be the executor of his will. There is a valuable piece of property inside a trust and the person wanted that property to go to his kids. The terms of the trust stated that the person's legal representative (ie: the brother) becomes the appointor. The person stated in his will that his kids are to be the trustees. The brother discovered how valuable that piece of property was, removed the kids from their capacity as trustees and took control of the trust (along with the property)! The kids can do nothing ...

So be careful, check your trust deeds before doing your will especially if you have valuable properties inside the trust.

 

[Terryw]

i think you should also consider that the shares of the company are property and will pass to the person's estate - unless they are owned by a trust etc.

If someone has a majority of the shares they can control the company and who the director is.

Also, you should consider the effects of not having a proper will. If no will your company will have no controller until the estate is sorted out. This could take a while and while this is happening your company cannot make decisions.

So make sure on the appointor issue and consider the control of the trustee too.

 

[Perp]

For the sake of completeness (and a bit of protection) you might want to pass the APPOINTOR role onto the person whom you want to inherit the trust assets. The appointor is the person who has the power to hire and fire trustees.

And/or have an independent appointor. There are multiple reasons why the way this Trust was set up was "sub-optimal". For example, this article from Harwood Andrews.

 

[WinstonWolfe]

You might be lucky enough to get a quick opinion over the phone if you ring Ian at Complete Succession.