In this edition of It depends, associate Sacha Robinson explains what a direct descendants trust is and discusses when it might be a suitable choice for succession planning.
Video Transcript
Welcome to today’s edition of It depends. Today, we will be talking about direct descendants trusts.
What is a direct descendants trust?
There are a number of different providers who have direct descendants trusts. They are all a little bit different, but they have the same basic idea that the capital of the trust will be protected for a particular person or persons, and their direct descendants.
How does the CGW structures direct descendants trust work?
Our direct descendants trust provides that the capital of the trust can only be distributed to the parents and their direct descendants, unless the parents consent. If the parents have died, then all of their children must consent to any distribution of capital to anyone other than their children and their direct descendants. The income of the trust can still be distributed to the usual wide range of beneficiaries.
Is a direct descendants trust right for me?
It depends. This type of trust may be appropriate for clients who are concerned about the partners of their children, or other third parties accessing the capital of the trust. It is also always important to consider whether a family trust election should be made in relation to the trust.
What are the alternatives to a direct descendants trust?
Advisers should carefully consider whether a direct descendants trust is appropriate for their client. There are a number of alternatives to consider. Firstly, a normal discretionary trust may be more appropriate, provided that the succession and control of the trust is considered as part of your client’s estate planning. Normally, a flexible discretionary trust will be most appropriate for most clients. Another option is to tailor the trust deed to a greater extent, to ensure that control of the trust passes in a particular way.
What should I do next?
Please contact me, or a member of our team if you would like to discuss direct descendants trusts further. Thank you for watching.
