Discretionary Living Trusts A legacy for generations

Written by Trust Specialist, Mervin Messias, it is the culmination of knowledge and expertise that has been acquired over many years’ study and practice of Trust law.

The author recommends the use of Trusts as part of estate planning because they provide solutions to many potentially complicated problems related to asset protection, succession planning, and disability protection. Many little-known benefits of Trusts are revealed to help protect your hard-earned wealth for generations to come. A Trust circumvents the whole process of winding up an estate, together with its potential delays, hassles and frustration.

In fact, a Trust deserves pride of place in any estate plan. It means business as usual, even after death, with no executor, executor’s fees or estate duty.

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    Understanding the parties to a trust is important as there may be some overlapping of roles.
    There are two parties to a trust – the founder and the trustees, both of whom are signatories to the trust. Beneficiaries are not necessarily signatories to the trust, unless they are also the founder or a trustee.
    The founder initiates the process and will have personal reasons for wanting to create a trust. First, the founder needs to crystalise his or her thinking (the who, what, why, when and how) before taking their plan to a trust specialist for legal advice.
    It is not legal for a person to be the only trustee and the only beneficiary, as he or she cannot contract with him or herself.


    It is possible to have more than one founder, persons who act jointly to create a trust.
    When the discretionary living trust is drafted, the founder must demonstrate clear intention to enter into an agreement with the trustees for the benefit of the beneficiaries. He or she is required to be divested of all or part of the legal propriety right and power of control over the trust property (as determined in the trust deed) and relinquish ownership in favour of the trustees.

    A founder has no legal right of enjoyment of trust property (unless he or she is also a beneficiary) and no power of control (unless he or she is also a trustee).
    Once the trust has been drafted, approved and signed by the founder and trustees, the founder generally plays no further role – unless a certain function is required of him or her, as determined in the trust deed.

    When the founder becomes a trustee, he or she is able to participate in the running of the trust as a trustee. This affords him or her the opportunity to continue being instrumental in the running and outcomes of the trust and guide his or her legacy to fruition. That said, even if this person was the founder, he or she cannot claim any special status or reserve any special powers as a trustee and cannot, therefore, throw his or her weight around and impose unilateral decisions on his or her fellow trustees.


    The trustees are chosen by the founder to take (non-beneficial) ownership of the trust assets and act fairly with respect to the beneficiaries. There is no limit to the number of trustees the founder may appoint. However, a minimum of two is advisable.
    Their role is completely dissociated from their private circumstances so that there can be no conflict of interests.


    Again, these are determined by the founder and have to be clearly identified in the trust deed. It is possible to add new beneficiaries and disinherit others by amendment. In a discretionary living trust, the beneficiaries do not own or control any trust assets. They receive the benefits at the discretion of the trustees.

    However, once they have accepted any benefits from the trust, their consent will be required to effect any changes to the trust deed.
    Trusts are complicated legal entities. If it is your intention to create one, think carefully about the how, what, who, when and why because it is a powerful and deeply personal legal entity that needs to meet many goals and expectations.



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