One of our more infrequent requests when drafting a will is to appoint separate trustees to manage certain trust funds outside the rest of the estate. In this edition of Did you know? we are going to look at examples of this in practice as well as any disadvantages this may have.
The best example of appointing separate trustees is if the clients are using a will-based trust, such as the protective property trust (PPT). The testator (John), can appoint his wife Jane and his brother Barry to be the executors and trustees of his will. Jane and Barry will be responsible for holding John’s estate while the estate is going through probate and they will distribute the estate as the will states.
John’s will contains a PPT, but for the PPT John has appoint his son David and his daughter Charlotte as the trustees of the PPT. His reasons behind this decision are because Jane and Barry are of a similar age to himself and he feels that at the time of his passing they may not be up to managing a long term trust, and instead feels his children are capable of doing so.
Appointing trustees in this manner is not exclusive to larger trusts such as the PPT. They can also be separately appointed for smaller trusts such as the bereaved minors trusts or charitable trusts. An example of this would be if John was making a gift to David’s 12-year-old child and feels that David will be the best person to act as a trustee for this particular gift.
What are the disadvantages?
Due to complex family structures becoming more regular, the testator(s) may have specific requirements for their assets, how they are managed and who they are managed by. The simplest way of explaining a disadvantage is by example;
John has 2 minor children, both with different mothers and he has sole parental responsibility. In his will he will be leaving his estate equally to both of his children, while appointing Barry to be the guardian of both children. However, John has also appointed his sister Julie to be the trustee for 1 of the children’s inheritance, and his father Terry as the trustee of the other child’s inheritance. John has passed away while both of his children of minors, therefore bereaved minors trusts have been set up for each child respectively.
This will mean that should Barry require any money for the upkeep of the children, he will need to make these requests to Julie and Terry separately. While in this example it does not seem like a lot of work for Barry, it could be if there were more children with different trustees appointed for each child’s share.