Who Should be Appointer of a Trust??

[buzzlightyear]

Who Should be Settler of a Trust??

Just in the process of a setting up a trust.

Who is usually or who do people have as the setttlor of their trust, seeing as they cannot be a beneficiary under the trust.

James

 

[Peter_Tersteeg]

I think the settlor is usually your accountant or solicitor. The one who sets up the trust.

The appointor should be yourself - this is the person who can hire and fire the trustees. Thus ultimatly the person who controls the trust.

I hope I haven't got my roles confused. Get whoever is setting up the trust to clearly explain the different roles to you.

 

[NigelW]

Just in the process of a setting up a trust.

Who is usually or who do people have as the setttlor of their trust, seeing as they cannot be a beneficiary under the trust.

James

Get a friend to do it. That way there is a legitimate argument that there is a true settlement of a sum, albeit nominal, on the trustee for your benefit by someone who cares...

IMHO it is preferrable for it not to be your acct or lawyer because they probably have no reason to really like you And they definitely should NOT charge you for the $10 or whatever amount is settled on the trust if they are the settlor. To do so could, arguably, invalidate the trust

Cheers
N.

 

[NickM]

Sorry Nigel, i tend to disagree.

Having an accountant or lawyer settle your trust will provide you with an independent party that settles your trust.
If the validity of your trust is questioned and there is the prospect of ensuing legal action there is a good chance that your advisor will stand by you in a professional capacity. A friend may not fully understand the implications or their role as a settlor.

NickM

 

[NigelW]

Sorry Nigel, i tend to disagree.

Having an accountant or lawyer settle your trust will provide you with an independent party that settles your trust.
If the validity of your trust is questioned and there is the prospect of ensuing legal action there is a good chance that your advisor will stand by you in a professional capacity. A friend may not fully understand the implications or their role as a settlor.

NickM

Hi Nick

Having your lawyer or accountant settle the nominal sum as the initial trust property is certainly the widespread practice. I guess the question just arises - why should your professional adviser do so? Whilst the risk is very VERY small, I think there is still a residual argument that it's not a valid settlement. You would certainly hope that a court would take a commercially realistic view if it was ever tested...otherwise there'd be approximately 95%+ of discretionary trusts out there invalidly constituted...

If the $10 somehow finds its way onto your bill from the adviser as a line item then I think there is a strong argument that the true settlor is not the accountant but instead whoever pays the adviser's bill and as this will typically be the principal that is a complete disaster! of an outcome...

I'd prefer to be extra cautious because the consequences are so catastrophic, but certainly if the client said they had no friends in the world to settle $10 for them then I'd do it out of sympathy!!!

Cheers
N.

 

[NickM]

Very valid points Nigel.

I suppose at the end of the day ( or should i say at the beginning of the trust) one should ensure that all is done correctly and in accordance with trust law.
Investors rely on professionals to guide them and if their professional is not up to speed then the risk is that it could all fall apart one day.

I generally ask my clients if they would like to make me a beneficiary rather than a settlor. Yet to find a taker !

Ill keep you in mind nigel when i set up my next trust as I struggle to find friends.

 

[Sim]

So is it NickM-no-friends rather than the usual now ?

 

[NickM]

So is it NickM-no-friends rather than the usual now ?

Plenty of relos - but no friends !

 

[NigelW]

So is it NickM-no-friends rather than the usual now ?

ah the irony...

 

[noddy]

If the $10 somehow finds its way onto your bill from the adviser as a line item then I think there is a strong argument that the true settlor is not the accountant but instead whoever pays the adviser's bill and as this will typically be the principal that is a complete disaster! of an outcome...

I'd prefer to be extra cautious because the consequences are so catastrophic, but certainly if the client said they had no friends in the world to settle $10 for them then I'd do it out of sympathy!!!

Cheers
N.

My understanding is that this happened on at least one occasion. The solicitors billed on a monthly retainer basis, and the monthly bills were traced back to the date the trust was formed and the bills were normally in rounded hundreds, except for that month, where it ended in $20. The settler contribution was $20. It was argued that relative to all other invoices, it is clear that the $20 was the settlor fee and as such, the trust was invalidated. Food for thought for all.......

PS...you can do as little as $1.00 as the donation...and it is best to open a bank account with that exact amount so that the trail can be seen that the donation did take place and where it went.

Noddy

 

[Andrew]

Someone once suggested to me that a good idea was to choose
someone who was near to the end of their life, a father or grandfather.

That way once they are gone there is nobody to say that they didn't
gift the $10.

andy

 

[NormH]

the settlor can't be a beneficiary so not good to use mum/dad/grand-dad etc as they can't be included then in the trust.

re using a bank-account, given that the banks charge heaps in fees and any account that is inactive for 7years or so the money is handed to the reserve bank I am not so sure that is a good idea either.

regards

Norman

 

[DaleGG]

Hi

For what it is worth, I like the idea of a friend of the family acting as settlor of the trust rather than a professional.

And, we also like the settled sum usually $10 to be stapled to the trust deed as it will be consumed by the bank if placed into a bank account.

Dale

 

[varkenjaab]

Can the settlor be a company?

Can the settlor be a company? I have a couple dormant/never traded incorporated companies of which I am the sole director/shareholder. They are not related in any way (apart from my being the director/shareholder) with the company I intend to use as the Trustee company.

If it is possible (to use a company as a settlor), what are the advantages/disadvantages with this? I don't have many friends... ...that I would like to personally involve as settlors in such affairs of mine.

Many Thanks
VJ

 

[D.T.]

Hi Dale/Nick/Nigel,

If a friend was to act as settlor, what is their involvement once the trust is settled. Do they have any responsibilities? If you fall out with that friend is there anything they can do to your trust?

-Regards

Dave

 

[NickM]

VJ
I wouldnt recommend the company - in fact i have never seen a company be the settlor before.
Q for Nigel as to whether it has to be a natural person

in your case i would opt for a professional if you choose not to have a friend

it would also rule out the coy from being a beneficiary in the future

Dave - the settlor cannot harm your trust after it has been set up

Regards
NIck

 

[NigelW]

Hi Dale/Nick/Nigel,

If a friend was to act as settlor, what is their involvement once the trust is settled. Do they have any responsibilities? If you fall out with that friend is there anything they can do to your trust?

-Regards

Dave

No further involvement. They give you say $10 and then exit stage left. No further involvement in the trust (but their name and signature will be on the trust deed for the next 80 years as a reminder of their kindness )

 

[NigelW]

VJ
I wouldnt recommend the company - in fact i have never seen a company be the settlor before.
Q for Nigel as to whether it has to be a natural person

in your case i would opt for a professional if you choose not to have a friend

it would also rule out the coy from being a beneficiary in the future

Dave - the settlor cannot harm your trust after it has been set up

Regards
NIck

It can be a company altho I've not seen that in the discretionary trust context. But for the reason mentioned by NickM I'd pick your "friendly" solicitor or accountant...

 

[see_change]

We have several trusts and alternate between our fathers as settlors , so we have trusts that can distribute to either side of the family.

Having seen the comments from Nigel in previous posts , with our latest fund , my father wrote a cheque for ten dollars , which we then photocopied along with the deposit slip and have these in with the trust deed.

See Change

 

[NormH]

We have several trusts and alternate between our fathers as settlors , so we have trusts that can distribute to either side of the family.

Having seen the comments from Nigel in previous posts , with our latest fund , my father wrote a cheque for ten dollars , which we then photocopied along with the deposit slip and have these in with the trust deed.

See Change

Not sure why you need bother about alternating between fathers as settlors unless you want to share the cost amoungst them as the settlor doesn't matter nor does it govern how the trust assetts are divvied up. The trust deed (in discretionary trust) will generally list several categories of benificary and these are commonly very "generic/general" such that just about anyone who has some sort or relationship with you is included. (even companies where you own only 1 share). The distribution of those assets of the DT are totally up to the whim of the trustee and they have the sole descretion to do that without any come back. (In most DT deeds that is, read yours to make sure there are no stipulations that certain categories or persons must receive benefits - if they do it can hardly be a DT ). That is why the appointer is so important, this is the only person who, if they don't like what the trustee is doing, can sack the trustee. That is why you should be the appointer of your own trusts as it is the appointer who ultimately owns the assets of the trust, cos they can sack a trustee, install themselves as trustee and then give or sell all assets to themselves. If they are your assets and in a trust that you are not the appointer for, I would be really worried about my future security and would be trying to ensure you become the appointer.

regards

Norman