Talking Trusts: powers of attorney and modern trust deeds.

Tom and Debbie had established their trust to own their family home many years ago.

They owned their own business and both their accountant and lawyer had advised them that a trust would be beneficial both from an asset protection and tax perspective. Tom and Debbie were the trustees of their trust together with their lawyer. Tom and Debbie as settlors, had the power to appoint and remove trustees of the trust.

Sadly not long after selling their business and retiring, Tom had a severe stoke. Physically, other than a slight limp, the stroke had no real effect. However, mentally it precipitated early onset dementia. Tom rapidly went down hill and Debbie had no option but to put him into a residential care facility. Debbie also decided to sell their large family home and downsize to something more manageable for her. Their children had all left home and started families of their own and the large section was getting too much for Debbie.

When Debbie went to see her lawyer about the sale she asked him how she would get Tom off as a trustee of the trust. He clearly didn’t have the capacity to sign any documentation and Debbie thought as they had wisely set up enduring powers of attorney a few years earlier, she would be able to act as Tom’s attorney and remove him as trustee.

Her lawyer told her that unfortunately that was not the case. The power to remove trustees of the trust was not able to be used by the attorney of one of the appointors. Further, you cannot delegate your power as a trustee to your attorney under an enduring power of attorney. Debbie would have no option but to go to Court to have Tom removed as a trustee of the trust.

The lawyer further explained that many modern trust deeds have a mechanism in them which allows the holder of an enduring power of attorney to exercise the power of appointment and removal of trustees, but that as Tom and Debbie’s trust was older, it didn’t have that power. Debbie was highly frustrated. A hugely stressful time for her was going to be made more so by the need to go to Court simply to sell the trust’s house.

ARTICLE 134 OF 152

Meet our PeopleRequest an Appointment