Can an Executor challenge a Will? In the previous article on this subject, I discussed the ability of an Executor to challenge the very Will for which they have been appointed the Executor when their role it is to uphold and defend the terms of your Will against any challenge.
In this article I want to address what you can do to potentially limit the ability of an Executor to challenge your Will.
It is particularly relevant where you operate a Family Trust. There are over 600,000 Family Trusts in Australia. They have lots going for them when it comes to asset protection and tax minimisation.
If you have one of them, it is important to understand what happens to your Family Trust when you die:
- Your Family Trust does not die with you. It carries on and can last for up to 80 years after you created it
- Many Family Trusts have significant assets but you cannot pass them on to anyone in your Will
- The most significant issue for you however, is who will control that Family Trust after you die
- On the surface, it is the Trustee who normally controls the daily operations of the Family Trust but, in reality, it is the little known person usually called the Appointor – the person who can hire and fire the Trustee of the Family Trust. They are the real controller of the Family Trust and most Family Trusts have an Appointor
- As the Appointor, almost invariably, is the mum or dad in the family, what happens when that mum or dad dies?
- Most Family Trust deeds say that the Executor of the persons Will becomes the new Appointor of the Family Trust
- That makes the position of Executor in your Will a crucial appointment because, in reality, not only are they the Executor of your Will but, because of that position, they also become the Appointer or controller of your Family Trust
- They can then change the Trustee, appoint themselves as Trustee and distribute all the assets of the Trust to themselves if they are a beneficiary as they usually are
- Trust me – it has happened
In the context of an Executor challenging your Will, you might be able to see where this story is going. If an Executor of your Will is considering a challenge to your Will, if they got some good legal advice, they could have some significant second thoughts when they realise that:
- To challenge your Will, would normally require them to resign as an Executor
- If they did so, they would no longer be the Appointor or controller of your Family Trust.
Those factors would certainly make them sit back and think about the prudence of challenging your Will.
Best advice I can give is that, when planning how you want to distribute your assets when you die and who you want to appoint as your Executor in your Will, give some equally serious consideration to the fate of your family trust.
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