Trust in Good Hands: What the “Power of Appointment” Means – and Why Your Will Should Provide for it

The “power of appointment” describes the power to appoint and remove trustees from a trust, and the person who holds that power is called the Appointer. This is not a statutory role under the Trusts Act 2019, but one created by the terms of the trust deed. Some deeds instead use terms such as Principal or Guardian.

Appointers exist in both discretionary/family trusts and charitable trusts; often being put in place by the settlor(s) when the trust is established to ensure continued control over who can be and remain as a trustee.

In a discretionary/family trust context, the Appointer might be two people such as a husband and wife, who hold that power jointly. In a charitable trust context, the Appointer is often connected with the original settlor, such as a family member or representative of a particular charitable organisation.

In either context, the power of appointment operates the same way. The Appointer does not manage trust assets directly but can exert significant influence by deciding who serves as trustees, including removing trustees who they consider are not working in the trust’s best interests.

Because of the importance of the Appointer role (and if the trust deed permits the transfer of the role) anyone who holds that responsibility in relation to a trust should make sure that their will stipulates who will be able to exercise the power of appointment after their death. It is an important responsibility which should not be left without a replacement to step in after the Appointer’s death, especially because discretionary trusts can exist for up to 125 years and charitable trusts can continue indefinitely.

If the power of appointment is not transferred to a new person (or people) or otherwise provided for in the trust deed, it is likely that the remaining trustees will be able to appoint and remove trustees. This increases the risk of moving away from the settlor’s original intention, trustee deadlock, or even require High Court intervention to appoint or remove trustees.

The team at MoranLaw have a wealth of experience in trust and estate planning law. They can help to ensure that the power of appointment is appropriately described in your discretionary/family or charitable trust, and guide you through the process of updating your will to include the power of appointment. Get in touch today.