Estate Planning - What Happens on the Death of the Appointor?

Many discretionary or family trusts have an Appointor (under whatever name it may be called).  This is the party who has the power to remove the trustee of the trust and appoint a new trustee.

The use of a power of appointment of this kind was introduced so that the key person who set up the trust could still control it even if they couldn’t necessarily control the trustee.  So if a trustee company were used and that company (possibly involving other family members) took steps that the key person was not happy with, the Appointor could simply replace the trustee with another.

But what happens to the power of appointment when the Appointor dies? If the Appointor dies and no new Appointor has been or can be appointed, it may be extremely difficult to remove the trustee, which could cause significant problems.

It is therefore vital that the trust deed state what happens upon the death of an Appointor.

If the trust deed is silent on the issue then it should be amended to provide such provisions.  Such an amendment attracts no or nominal stamp duty and is not a resettlement of the trust.