Trusts work by separating control of the assets held in the trust from the benefit.  The person who has control of the trust assets is the Trustee. The Trustee is the legal holder of the assets and is responsible for the day-to-day management of the trust and the due administration of the trust.  

An effective testamentary trust should have many people who can potentially benefit from the assets in the trust (the term for these people are Beneficiaries) and each beneficiary’s entitlement should be at the complete discretion of the Trustee. 

 A trustee can also be one of the beneficiaries of the trust, and if that is the case, then the trust assets will ‘look and feel’ more like that person’s assets because they are in control and can choose themselves or their family members to benefit from the trust.  If you are simply a beneficiary without being a trustee, then your entitlements in the trust are at the trustee’s discretion. 

In many cases, an additional level of control over the trust is achieved by having an appointor. The appointor is the ultimate controller of the trust. They are responsible for appointing and removing the trustee.  In this way, the appointor can step back from the duties of managing the trust, while maintaining a level of supervisory control over the trust.

For tailored advice on how testamentary trusts can be used in your estate plan, contact us for an estate planning consultation.