How Your Family Trust and Your Will Actually Work Together
f you have both a Will and a Family Trust, you might be wondering how they fit together. Many people assume everything they own passes through their Will, but that is not always the case. A Family Trust operates a bit differently, and understanding the link between the two can make a huge difference to how smoothly things run for your family later on.
Here is a simple breakdown of how they connect.
First things first: what is a Family Trust?
A Family Trust is something you set up during your lifetime to hold assets for the benefit of your family. Think of it as a separate “bucket” where you can put investments, property or business interests, and the trustee decides who receives income or capital each year.
People often set up a Family Trust because it can help with:
- Protecting assets
- Saving tax
- Managing long-term wealth
- Supporting children without giving them big lump sums too early
Because the trust exists on its own, separate from you, anything inside the trust generally does not form part of your estate when you die.
So what does that mean for your Will?
It means the assets inside the Family Trust do not get distributed under your Will. They do not pass through your executor, and they are not treated like your personal possessions. They simply stay in the trust.
But here is the important part:
Your Will decides who controls the trust after you are gone.
And control is everything.
The real connection: control of the trust
Even though the trust assets do not go through your Will, the roles connected to the trust do. These roles might include:
- Appointor – the person who can hire or fire the trustee
- Trustee or director of the corporate trustee – the person who actually runs the trust
- Guardian or protector – someone who must approve major decisions
Whoever steps into these roles effectively controls the trust, so it is essential that your Will sets this out clearly.
A few important questions to think about
When you are updating your estate plan, ask yourself:
- Who should take over as Appointor?
This is usually the most important role. If you do not choose someone, the trust deed might make that decision for you, and it might not be the person you would have chosen.
- Do you want the trust to continue long-term?
Some people want the trust to carry on for the children or for tax reasons. Others prefer it to be wound up at a certain point. Your Will can record your intention, provided it aligns with the trust deed.
- Will the corporate trustee need new directors?
If your trust has a company as the trustee, you may also need to think about who becomes the new director or shareholder.
- Does the trust deed need a refresh?
Some older trust deeds do not deal well with succession at all. Reviewing the deed is often just as important as updating the Will.
If you also want a Testamentary Trust…..
Some people have a Family Trust already and decide to set up a Testamentary Trust through their Will as well. These two trusts can work side by side. One holds assets you personally own; the other continues operating as before. With the right planning, they complement each other nicely.
Common pitfalls to avoid
A few problems come up again and again:
- Thinking the trust assets will automatically be handled under the Will
- Forgetting to choose a new Appointor
- Leaving control to someone who may not be ready or suitable
- Having an outdated or unclear trust deed
- Not updating company documents for a corporate trustee
These issues can create confusion or conflict later on, which is exactly what most families want to avoid.
Why this matters for families and business owners
Family Trusts often hold valuable assets – investment properties, share portfolios or business interests. If you have put time and effort into setting up a trust, it makes sense to make sure it is passed to the right hands.
Good planning now protects your family later and prevents disagreements.
In a nutshell….
Your Family Trust and your Will are closely connected, even if it does not look that way at first glance. The trust assets do not go through your Will, but your Will decides who takes over these important roles and how the trust should ideally continue.
If you have a Family Trust, it is well worth reviewing your Will and the trust deed together to make sure everything lines up and reflects what you want. If you would like help looking over your documents or planning the best structure for your family, our team at Respect Wills & Estates are always happy to assist.
To book your complimentary 15-minute phone appointment, you can contact the team at Respect Wills & Estates by email, phone, or the website:
EMAIL: [email protected]
PHONE: 1300 099 455
LOCATION: 258 Centre Road, Bentleigh, Melbourne VIC 3204