Monday, March 4, 2013

Appointor succession – choose wisely

With thanks to co View Legal director Tara Lucke, today’s post looks at how the role of the appointor is often the most important to consider when establishing or reviewing a trust. There does not necessarily need to be an appointor provision under a trust deed, however where there is, a trust deed will normally set out in some detail the way in which the role of appointor is dealt with on the death or incapacity of the person (or people) originally appointed.

Failing to understand succession arrangements of an appointor can create a range of difficulties as highlighted in the recent case of Montevento Holdings Pty Ltd v Scaffidi (2012) HCA 48. A full copy of the case is available at

The case concerned a challenge by a beneficiary of a discretionary trust to a change of trustee by the appointor. The challenging beneficiary was Guiseppe Scaffidi who, along with Maria (his mother) and Eugenio (his brother), was within the range of potential beneficiaries of the Scaffidi Family Trust.

The original appointor of the trust was Antonio Scaffidi (the father). On Antonio’s death, Maria became the appointor and by deed Maria subsequently appointed Eugenio Scaffidi as the appointor.

After his appointment, Eugenio appointed Montevento Holdings Pty Ltd (a company of which he was the sole director and shareholder) as the sole trustee, effectively giving him complete control over the trust and its assets.

Guiseppe’s challenge to the appointment of the trustee company ultimately failed before the High Court, essentially because the appointment complied with the provisions of the trust deed. The decision highlights that the role of appointor can often give ultimate control of a trust. Furthermore, it is a timely reminder of the importance of regularly reviewing the appropriateness of the appointor role in the context of succession planning, particularly where multiple beneficiaries are arguably intended to benefit from a discretionary trust over time.

The mechanics of the decision will be explored further in next week’s post.

Until next week.