Why Family Trust Succession Should Be Documented Outside the Will in Western Australia

Introduction

In Western Australia, many families rely on valuable, discretionary (or “family”) trusts as key wealth management and estate planning vehicles.

 

However, the control of such valuable trusts at a succession event such as the death of the key controlling person behind the trust (typically exercised by the deceased in their role as the Trustee, the sole director of the Trustee, or holding the Appointor or Guardian role) is frequently misunderstood or poorly documented.

 

If the succession of a key trust role is specified only in a Will, the transfer of control* will be delayed until probate of the deceased’s Will is formally granted, which:

• is often weeks or months after the succession event occurs, and
• can be significantly longer, if the Will is contested.

 

During that period, a trust can effectively be ‘paralysed’ (and even more so if the deceased was a personal trustee of that trust!).

 

This article explains why documenting ‘trust succession’ outside a Will, through a simple yet dedicated Deed of Variation or Succession, is a more secure, private, and efficient approach under Western Australian law.

 

*Control and Succession in Family Trusts

 

Materially, control of a discretionary or family trust is typically vested not in the Trustee, yet in the Appointor (who may also be called the ‘Principal’ or ‘Guardian’, depending on the trust deed and the precise roles those offices have).

 

For the sake of brevity, we’ll collectively refer to all these non-Trustee positions as “Appointor”.

 

The Appointor has the ultimate power to appoint and remove Trustees, effectively determining who controls the trust assets.

 

If the succession of that Appointor role is provided for only in a Will (and assuming a valid one  exists…), no transfer of authority occurs until probate has been granted by the Supreme Court of Western Australia and, given that probate often takes weeks or months, and even longer where there are challenges or complex assets, the trust may be “frozen” during this period, leaving beneficiaries and business operations exposed to risk.

 

The Risks of Relying on a Will

 

Notably the Will has no legal effect until probate is formally granted, which delays any change in trust control, and such delays can be significantly extended where a Will is challenged.

 

There is also a public disclosure risk.  As, once probate is granted, Wills become public documents; so any sensitive details about trust control arrangements embedded in a Will are revealed.

 

Using a stand-alone Deed of Variation

 

A dedicated Deed of Variation (or equivalent ‘succession deed’) provides a clear, immediate, and private mechanism for transferring control of the trust on death or incapacity.

 

The key advantages of using a Deed of Variation over a Will include:

 

• Immediate effect – The Deed of Variation takes effect on the succession event occurring and without waiting for probate, ensuring continuity of trust administration;

 

• Privacy – Unlike Wills (once the Will maker is deceased), trust deeds and their variations are not public records;

 

• Flexibility – The Deed of Variation can (providing the trustee’s variation powers are wide enough) incorporate modern governance and dispute resolution provisions tailored to each family’s circumstances;

 

• Legal robustness – A properly drafted Deed of Variation or an alternative succession deed can avoid the pitfalls highlighted in Mercanti v Mercanti [2016] WASCA 206, where one trust variation was upheld and another invalidated due to differing wording used for the trustee’s variation power; and

 

• Reduced dispute risk – Clear succession and dispute resolution provisions can prevent conflicts like those seen in the recent Rinehart family trust litigation, where unclear control mechanisms led to protracted (and very expensive) court proceedings.

 

Best-Practice Drafting for Trust Succession

 

Modern Deeds of Variation (for specific trust succession) should be carefully drafted to balance control, flexibility, and to reduce dispute opportunities.

 

Where multiple successive Appointors are named, it is sensible to require joint & unanimous decisions to prevent unilateral control changes (e.g., say, the surviving 3 successor adult children of the deceased Appointer/Will Maker).

 

Of course, requiring unanimous decision-making can lead to deadlock, so it is also good practice to include dispute resolution (mediation) provisions in the succession deed to sensibly and cost effectively resolve disputes without resorting to expensive, public Court proceedings.

 

Clear incapacity triggers (e.g. medically diagnosed chronic dementia, coma etc) should be included to define how and when an Appointor is deemed incapable of making decisions, and who assumes authority in that event.

 

Importantly, no changes to the administrative provisions of a trust deed may occur if the trustee’s powers of variation are not sufficiently wide. So it is essential to ensure the trust’s variation clause is broad enough to permit changes to Appointor and introducing dispute resolution provisions if desired.

 

Conclusion

 

In Western Australia, reliance on a Will alone for the succession of a Family Trust’s Appointor or similar office exposes the trust to delay, public scrutiny, and operational risk.

 

In contrast, a dedicated Deed of Variation/family trust succession deed ensures a smoother, private transfer of control, avoiding the bottlenecks of the probate process and preserving family intentions, as well as reducing the chances of later disputes, ensuring seamless continuity of trust management and family wealth control.

 

Has this left you wondering whether the succession of your family trust is robust?
Reach out to us on via the contact form below for a confidential discussion.