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What You Need to Know About Leading Member Trusts

What is a Leading Member Trust?

A Leading Member Trust is essentially a Discretionary Trust on steroids. It provides the ultimate asset and succession protection and benefits.

The power of this comes into place for asset protection; if something happens that makes the Leading Member Appointor bankrupt, they would automatically be succeeded and would no longer have any control over the trust; protecting the trust. Furthermore, if the Leading Member does become mentally incapacitated or does pass away, succession will automatically pass.

Who Manages a Lead Member Trust?

In a Leading Member Trust, the Leading Member Appointor has ultimate control, not a Trustee or Beneficiary. and more importantly, it is easy and simple to add in succeeding Leading Member Appointors as per their wishes. There doesn’t need to be a named Beneficiary and Beneficiaries are limited to the bloodline.

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
  • Can determine when the Trust is to be wound up and which Beneficiaries are to benefit from the Trust and in what circumstances
  • Can limit the Beneficiaries to the lineage of the Leading Member or those persons or entities at the discretion of the Leading Member;
  • Control and main Beneficiary switches automatically to the next Leading Member in the event of death

Benefits of a Leading Member Trust

A Leading Member Trust has all the benefits of a regular Discretionary Trust and improves on some of the limitations that most have. Traditional Discretionary Trusts fail to provide protection for Trustees and generally completely fail to deal with the transfer of control of the trust is something happens to the Appointor. The concept of a Leading Member Trust, however, is to avoid a stalemate between members and create a clear line of succession.

Take this scenario, for example:
If a father is the leading member of the trust and something happens to him, then the mother (his wife) is the second leading member. If something happens to both father and mother, the trust is split into equal parts for their 3 children. This means beneficiaries are limited to the bloodline of the father and mother. ie. their kids, grandkids etc.

How to Setup a Leading Member Trust

If you already have a Discretionary Trust, this can be upgraded to a Leading Member Trust, otherwise, you can create an entirely new trust. Getting this right is critical to protecting your assets and family, so it’s important to have a professional set It up for you.

We understand that Trusts must be set up according to your needs, which is why our accountants will take the time to listen and create a solid and comprehensive asset protection strategy.

Give us a call on 03 5134 1778 and discover how PCR Accounting & Advisory can get set up your Leading Member Trust today.

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.