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.
