A trust is an agreement, whereby a company or a person agrees to hold assets for the benefit of others. Discretionary Family Trusts, Unit trusts and Hybrid Trusts are the three most common types of trusts.

A Trust Deed is a mandatory legal document which is required to create a Trust. It outlines the purpose of the trust, the rights, powers and obligations of the trustees and beneficiaries. It also classifies various parties such as initial beneficiaries, trustee(s) and appointers.

A Corporate Trustee

A trustee of a discretionary family trust can be either one or more individuals or one or more corporates or a combination of both individual and corporate.

It is always better to appoint a corporate as trustee as compared to an individual. Following are the advantages of having a corporate as trustee:

if a current individual trustee dies or resigns, all the assets of the trust needs to be transferred from the name of the old individual trustee to the name of the new individual trustee, but in case of a corporate, there is no requirement of transfer of assets if a

Director of a company dies or resigns;

Directors of corporate trustee can be beneficiaries in their individual capacity of a trust whilst still being in control of the same trust;

Corporate trustee ensures that the assets of the trust are managed by all the directors and not by one individual like that in case of an individual trustee; and

In case of a corporate trustee, all the assets of the trust are legally held in the name of the corporate and not individual which thereby provides a protection of the assets in a trust.

Process to Change an Existing Individual Trustee To A Corporate Trustee

An appointer is the party in a trust, who is responsible for appointing and replacing a trustee. An appointer can be either a party who has created the trust, a settler, a trustee or a third party.

The appointer can replace an individual trustee of a discretionary family trust by a corporate trustee by filing a ‘Deed of Appointment and Removal of Trustees’. Following are the documents required for replacing an individual trustee of a discretionary family trust by a corporate trustee:

Deed of Appointment and Removal of Trustee(s); and

Notice of Resignation of Trustee(s).

The following are the information required to complete the ‘Deed of Appointment and Removal of Trustees’:

Names of the appointer;

Details of outgoing trustees and continuing trustees;

Details of the new trustees;

Details of the trust; and

Signatures of appointer, continuing trustees and new trustees.

Owen Hodge Lawyers can assist in ensuring that the change from individual to corporate trustee is compliant with all relevant regulations.

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