Delegating control is a matter of trust

Trusts are all the rage.

To create a trust is easy. It starts with a thirty-plus page trust deed, which allows you to hand all, or some of your money, to a completely separate entity so you do not control it anymore. Why would anyone want to do that? Well people get worried about being sued and losing the lot; or their ex-spouse finding it; or their accountant says it’s a good way to save tax; or it’s cheaper to set up than a company.

There are three major players in the trust world.

The Trustee is generally a long-suffering individual who is chosen to be the gatekeeper of someone else’s fortune. They harbour thoughts of throwing off their responsible image and doing a runner to Rio—few make it. Trustees are often suspected of torturing difficult beneficiaries by giving them their inheritance on a drip, drip basis.

The Beneficiary can slouch around, waiting to be paid, grouching and whingeing about how the trustee is not doing a good job. Yes, it is a lot of fun. Beneficiaries of discretionary trusts are a little better behaved as the trustee decides who gets the money and in some trusts, the trustee can decide not to give anyone anything. This leads to the phenomena of ‘trustee’s pet’ for those beneficiaries who know which side their bread is buttered.

The Appointor is a shadowy figure who works behind the scenes and usually decides how the trustees are dismissed and who replaces them. If he does not like what the trustees are doing, he sacks them. Making yourself the appointor allows you to call the shots and continue to control your fortune.

Trusts have drama, intrigue and can be a great source of entertainment in your declining years.