Tuesday, November 12, 2019

Automatic** disqualification clauses for trustees and appointors


With thanks to the Television Education Network, today’s post considers the above mentioned topic in a ‘vidcast’.

As usual, an edited transcript of the presentation is below -

Question: How do ‘automatic disqualification’ clauses work and are they effective from a family law perspective?

Answer: This is an interesting question.

Many of the trusts that we (and other law firms) establish contain a provision in them that we call an ‘automatic disqualification’ provision.

The provision is drafted to ensure that anybody in a key role, such as an appointor or trustee, will get automatically removed from that role upon certain events happening to them.

The most common disqualification scenario is death or incapacity.

If you’ve got a trustee who becomes incapacitated or dies, then obviously they need to be removed and someone else needs to step into that role to manage the trust.

However, those triggering events can also include a family law breakdown. We can have a clause in our trust deed or our will saying that if the appointor or the trustee separates from their spouse, then they are automatically disqualified from that role and somebody else steps in in their place.

I’m not aware of any instances where the effectiveness of that type of clause has been tested before a Court, but I think it has reasonable grounds of being successful if it is tested.

As a general rule we include this type of provision in all of our documents on the basis it gives our client a fighting chance of retaining the trust if anything goes wrong for them personally, since they didn’t actually make that change to the control of the structure themselves.

** For the trainspotters, ‘Automatic’ is a song by The Pointer Sisters from 1983.

Tuesday, November 5, 2019

Seems like all that is ever wanted is (no) markings on wills**

View Legal blog Seems like all that is ever wanted is (no) markings on wills**

Following last week’s post concerning codicils, an adviser contacted me about why we were so pedantic concerning wills, for example, wanting to ensure that no paperclips or other markings are made on an original will.

This question follows neatly from the codicil discussion.

In particular, where there are markings on a will, that might indicate something else has been attached to the will, then the law creates a number of obligations to investigate this potential issue.

For example, it could be assumed that a paperclip may have attached a codicil to a will.

Obviously, in many instances, the paperclip will in fact have only attached, say, a 'with compliments' slip.

This therefore can create a significant amount of wasted resources, hence our very strong recommendation that nothing be attached in any way, shape or form to a will (or codicil).

** For the trainspotters, the title of the post today is riffed from a line from The Foo Fighters song ‘This is a call’ from 1995.