Discretionary trusts are most commonly established under a trust deed and governed by the terms of the trust deed. Therefore, careful consideration and drafting of the terms of the trust deed followed by regular reviews and amendments are required to ensure their effectiveness and to accurately reflect the current requirements of the trust.
The followings are the 5 key issues that you should consider when establishing a trust or reviewing the trust deed of a trust.
1.Control and Succession
Most discretionary trusts include an ‘Appointor' role which generally has the power to appoint and remove trustees. Unlike the trustee, the role of an Appointor is a creature of the trust deed, and once created, it can have effective control of the trust depending on the terms of the trust deed. Therefore, it is critical that the trust deed has sufficient succession provisions to deal with both voluntary and involuntary vacation of the role, in particular, in the events of death and loss of
