Last
week’s post set out a number of reasons as to why a single testamentary
discretionary trust (TDT) might be the preferred structure, even if
there are multiple family members to benefit under an estate plan.
As
noted there are a number of factors that need to be taken into account in any
particular estate planning exercise and there are a wide range of the factors
that might be relevant in deciding to implement multiple TDTs.
Many
of these factors have a practical focus and can include:
1
the different geographical locations of the
children - particularly if one or more children live overseas;
2
poor relationships between siblings (or their
respective spouses) meaning that jointly controlling wealth is likely to
further fragment family dynamics;
3
the risk profiles of each child’s investment
outlook;
4
the underlying nature of the wealth – for
example, if particular assets are earmarked for the sole control of a
particular beneficiary;
5
differences in the ‘life cycle’ of each
beneficiary – for example if one child themselves has young (or no) children
whereas another child has adult children, their investment objectives can look
quite different;
6
the desire to have different control mechanisms
in relation to different children – for example one child might be the sole
controller of their TDT whereas another child may have one or more co-trustees,
or indeed, not be a trustee at all; and
7
there can be a myriad of difficulties that arise
if a single TDT is utilised and it is still running in, say, two generations
time both in terms of overall management of the structure and how income and
capital is ultimately allocated.
In
the next post we will look at one further variation on this debate, the so
called ‘hybrid’ approach.
Until
next week.
