Monday, December 10, 2012

Final post for 2012

With the annual leave season starting in earnest over the next couple of weeks and many advisers taking either extended leave or alternatively taking the opportunity to catch up on things not progressed during the calendar year, last week’s post will be the final one until early 2013.

Similarly, the Twitter and Linkedin postings will also take a hiatus until the New Year as from today.

Thank you to all of those advisers who have read, and particularly those that have taken the time to provide feedback in relation to, the various posts.

Additional thanks also to those who have purchased (via donation) the various versions of ‘Inside Stories’ – the consolidated book of posts.  An updated version of this book, containing all posts over the last 3 years should be available in the new year.

Very best wishes for Christmas and the New Year period.

Monday, December 3, 2012

Single v multiple testamentary trusts: The ‘hybrid’ approach

Recent posts have looked at various aspects of the debate in an estate planning context of whether a single or multiple testamentary discretionary trust (TDT) will provide the best outcome.

As highlighted in those posts, there are a myriad of issues that should be taken into account and often the approach that best suits the client may change over time.

One mechanism that we have seen used with increasing regularity is a ‘hybrid’ approach.  Under this model, elements of both the single and multiple testamentary trust solutions are combined.

For example:

1              a set percentage (or certain assets) are distributed to a TDT which includes all lineal descendents as potential beneficiaries (i.e. the ‘head’ trust);

2              the control of this ‘head’ trust is jointly shared amongst various family members and any nominated independent trustees;

3              a separate TDT is also established for each child and their respective lineal descendents;

4              a separate percentage share of the estate, or discreet assets, are then gifted to each of these ‘sub’ TDTs; and

5              normally each child would control (perhaps jointly with a co-trustee) ‘their’ TDT.  Each child would also have the ability to independently regulate succession of control for their trust.

As in any estate planning exercise the appropriateness of the hybrid approach will depend on a range of issues including the exact objectives of the client, the overall family dynamics and the nature and value of the wealth involved.

Until next week.