What does your standard current trust deed state in relation to the issue of appointors passing away and who steps into their shoes?
What happens when an appointor passes away generally depends on the instructions of the person setting up the trust!!
However, in general:
- If there is only one appointor, unless their will says otherwise, the powers of appointment will pass to their legal personal representatives (LPRs);
- If there are two or more joint appointors, as each one dies, the powers of appointment will pass to the remaining joint appointors until there is only one left, and then the powers will pass to that person's LPRs;
- If any of the appointors are considered "independent" (eg, an accountant or solicitor), then that person will never get the sole power of appointment (i.e., once there is only one family member appointor and the independent left, the powers of appointment will pass to the family member's LPRs on their death). However, we require specific instructions in this regard so that this can be specified in the schedule to the deed; and
- The appointors may choose not to be joint (in the context of survivorship), meaning that on their death, their own power of appointment will pass to their own LPRs, rather than to any surviving joint appointors. Where a husband and wife are to be joint appointors, the deed is set up as per 2. above.
It should also be noted that subclause 18.3 of the deed allows for additional/replacement appointors to be appointed while the appointors are still living:
"Subject to the restrictions (if any) specified in item 9 of the Schedule, an Appointor shall have the power, exercisable jointly with any other Appointor, from time to time by deed or will to appoint another person to act as the Appointor either jointly with the existing Appointor or to act as sole Appointor and to provide for the method of succeeding Appointors to be appointed and if such a person or persons accept the appointment they shall exercise the powers of the Appointor in accordance with the terms of the appointment notwithstanding what is specified in the Schedule about who shall be the initial Appointor of the Trust."
Also, under subclause 18.6, "If at any time or from time to time there is no Appointor remaining or otherwise appointed, the Trustee for the time being may assume the powers of the Appointor."
Finally, an appointor may be automatically removed if they become bankrupt or mentally ill, or if the appointor "is acting in the capacity of, or on behalf of, a trustee in bankruptcy, liquidator or administrator, or the Family Court Registrar", but they can resume their position if the condition that caused the Appointor to be removed ends, is reversed or otherwise ceases.