Establishing a family trust doesn’t stop when the trust deed is signed. There is other important documentation that should be aligned with the family trust deed including:

• A Will dealing with your personal estate
• A Letter of Wishes, and
• Enduring Powers of Attorney (for Property and for Personal Care & Welfare)

You may also need to have a relationship property agreement if relationship property is being transferred to the trust.

The transfer of a house or land to the trust will also require further legal documents to register the change of ownership; it may also be necessary to prepare and register new mortgage documents. If a sale and gifting programme is needed (see page 16) this will require a number of different documents.

Your Will

Your new Will should include provisions about:

• Specific gifts or items to be left to named people
• Other household and personal items
• Your other remaining assets, usually given to your trust
• The debt owed to you by your trust, if any, which would normally be forgiven
• Transfers of your powers to appoint and remove trustees under the trust deed
• Appointment of guardians if you have young children, and
• Any instructions regarding organ donation, funeral arrangements, cremation or burial.

Letter of Wishes

It’s also a good idea to sign a Letter of Wishes when the trust is established. This sets out in detail your actual intentions for the trust and, in particular, it covers things such as:

• How trustees should deal with the trust assets
• When and how you think the beneficiaries should receive distributions, and
• How the trust will operate after your death.

A Letter of Wishes provides useful guidance for the trustees who will operate the trust after your death. However, it’s not binding on the trustees.

The letter can be updated at any time by you as settlor.

Enduring Powers of Attorney

You should also sign Enduring Powers of Attorney (EPAs) covering both your personal property, and your personal care and welfare. These documents give a third person, the attorney, the power to act on your behalf.

An EPA in relation to Property can cover all of your personal assets which include any land and buildings that you own as well as bank accounts, vehicles and any other form of personal property. You can say when the EPA is to take effect, which could be at any time, or only if you become incapacitated, mentally incapable or if you travel or move overseas.

A property attorney may be a person such as your spouse or partner, friend or your lawyer, or one of the five recognised trustee corporations.

For the EPA in relation to Personal Care and Welfare, you would generally appoint a close family member or a friend as attorney. An organisation cannot be appointed to this position. This type of EPA can only be used if you become mentally incapable of looking after your own personal care and welfare.

Your attorney can ensure your medical, dental and residential needs are taken care of.

Other documents

Your lawyer may also recommend that you sign a document to delegate your role as trustee (usually called a Deed of Delegation and Power of Attorney). This will state who can sign documents on your behalf if you’re overseas or physically incapacitated. It cannot be used in the event of mental incapacity. An EPA cannot be used in respect of a trustee’s role.

 

Please contact Tina McLennan,  Anna Ferguson, Gemma Keystone or Jo McLennan for more information.