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Do You Know the Roles of a Trust, SMSF & Executor?

Whether you are a director of a trustee or a trustee yourself, you need to be acquainted with the responsibilities of being a trustee.

But what exactly is a trustee? In simple terms, a Trustee is the named person who manages the assets held within a Trust. Often, the person who creates the Trust is the Trustee until they can no longer fill the role due to incapacitation or death; at that point, a Successor Trustee takes over.

Responsibilities of a Trustee

Naturally, the most important aspect of the role of Trustee is ensuring one acts in the best interest of the Trust.

The key responsibilities for a trustee are:

  • Familiarise yourself with the trust and who the beneficiaries are.
  • To preserve the assets of the trust
  • To accumulate and pay income of the trust as per the trust deed
  • To advance or distribute capital as per the trust deed
  • To act with care and diligence
  • To maintain proper accounts.

The powers you have as a trustee will be outlined in the trust deed.

Responsibilities of Appointor

The Appointor’s primary role and responsibility are to appoint and remove trustees of a trust. They have the ultimate power over the trust.

What is a Leading Member?

We use the term Leading member with our Trust Deed.

A Leading Member Family Trust focuses on the critical role of Appointors. Think, if you will, of the British Monarchy. If something happens to the Queen, the next in line for the Crown is currently Prince Charles, then Prince William.

Diagram One: The British Crown – Line of Succession

With a Leading Member Discretionary Trust, the head of the Trust is the Leading Member Appointor.  It is not the Trustee nor principal beneficiary.  The Leading Member Appointor:

  • Controls who can be the Trustee, including the appointment and removal of the Trustee;
  •  Can veto many of the decisions of the Trustee, much the same as the Queen has the power to veto decisions of the English Parliament;
  • Can determine when the Trust is to be wound up and through their veto power, which beneficiaries are to benefit from the Trust and in what case;
  •  Importantly limit the beneficiaries to bloodline lineage of the Leading Member or those persons or entities at the discretion of the Leading Member;
  • Trusts primary beneficiary so that in the event of death, they control and main beneficiary switches automatically to the next Leading Member.

So, as you can see the use of the Leading Member solution provides ultimate control for family wealth and the transition of that through putting in succeeding Leading Members.

Responsibilities of Self Managed Superannuation Fund (SMSF) Director

A SMSF is a trust and as a trustee of a SMSF you need to follow:

  • Your funds trust deed
  • The SIS Act.
  • The Income Tax Rules
  • The Tax Administration Act
  • The Corporations Act
  • Other general rules for tax and trust laws.

This means leaving and building wealth for retirement. It also means following all relevant rules of the above legislation. If you are a trustee of an SMSF it is best to ensure you have good advisers around you to ensure that you maintain compliance.

SMSF’s can be great Estate Planning tools and our SMSF deeds follow the Leading Member solution as mentioned above. Take a look at our Succession Planning services for more on this.

Responsibilities of an Executor

An executor is a person or person/s named in a Will to carry out the Will-makers wishes after death.

As an executor, there is a range of responsibilities you have. This includes:

  • Collect all the assets and have them valued
  • Find out what debts are owed and pay them from the money made by selling assets
  • Arrange tax returns
  • Claim any life insurance proceeds
  • Arrange the funeral
  • Apply for a grant of probate
  • Distribute the estate according to Will

Take or defend legal action on behalf of the estate

As an expert in company finance and small business accounting, PCR can assist you in understanding the roles of a trust, SMSF and Executor.

Get in touch with us today and see how we can assist you in your duties while protecting your wealth and assets.

Owner of PCR Accounting & Advisory, Peter Marmara-Stewart is a top-tier accountant and financial advisor dedicated to helping clients reach their business goals and achieve financial freedom. Peter is highly regarded for his client-focused approach and entrepreneurial spirit, catering to a diverse range of professionals across a wide scope of industries all across the country. Peter’s expertise can help you plan effectively, set goals, maximise profits and protect your assets. Get in touch today on (03) 9847 7516.