What happens when one son doesn’t need the capital, another wants to develop a property with a huge loan and the daughter needs money ASAP for a new home.
Anyone who’s had kids knows that they often don’t do what they’re told. So it shouldn’t be a surprise that one of the main challenges with estate planning is ensuring your death wishes are not subverted by your children.The Australian Taxation Office estimates that there are well over 800,000 family trusts in Australia, controlling more than $3 trillion of assets.
The appointor can remove and replace the trustee and effectively leave the villains holding an empty shell.. When the first parent dies they give the shares in the trustee company to the survivor. [Note that it’s probably better for a family trust to have a corporate trustee because a death does not require a change of trustee with the associated inconvenience of changing the ownership of trust assets and also the possible expense of transfer duty.
The reasons dad and mum originally set the trust up will probably not apply to all three children now. Dad set up the trust when mum was focusing on child-raising and so working and earning much less. Dad was then able to share some of what would otherwise have been his income with her and save some tax.AdvertisementThe eldest son is a doctor who wants to keep the trust for asset protection and regular income and really doesn’t need any of the capital in the trust.