A little upfront planning can help preserve relationships as well as assets.
When roles, expectations and powers are unclear, disputes can arise and often at the worst possible time, such as after the death of a family member.
Why governance matters
A trust deed sets out the legal framework, but it does not address family expectations, values or the “rules of engagement” around control, communication and decision-making. That’s where a trust charter or family constitution can be invaluable.
A trust charter is a non-binding but strategically important document that outlines:
- the family’s vision and values
- agreed principles for managing wealth
- expectations of trustees, appointors and beneficiaries
- communication protocols
- dispute resolution processes.
For more complex families, such as those with multiple branches, blended structures or significant operating businesses, these documents can prevent misunderstandings and provide clarity across multiple generations.
For example, disputes often arise because beneficiaries don’t understand the limits of their rights or the powers of trustees. Also, families often avoid talking about who will control the trust next.
In the longer term, a charter provides continuity as family members age, or retire, by providing younger family members with guidance about their responsibilities.
Trustee succession planning
A number of recent court cases have shown how the absence of agreed rules and communication channels can increase conflict, particularly when it comes to succession.
A trust’s long-term stability depends heavily on what happens when the original trustee, appointor or guardian dies, becomes incapacitated, or steps aside. Many families assume the deed will automatically produce a smooth transition. Often, it doesn’t.
The Cardaci dispute, an eight-year legal battle ending with a High Court decision in 2024, shows how messy trust control can become without forward planning. The case involved family members disputing the administration, decision-making powers and trustee conduct in a long running family business. The litigation demonstrates how disputes about control and succession can escalate unless families regularly review their trust structures and governance frameworks.i
Preventing disputes
Don’t be tempted to “set and forget” a trust. Keeping on top of new needs and expectations as well as changing family structures may save time and money later on.
1. Review the trust deed regularly
Trusts established decades ago often contain outdated provisions and restrictive definitions of beneficiaries. Major life events, such as marriages, divorces, deaths, business restructures, should trigger a deed review.
2. Create or update a trust charter
A charter can address:
- succession intentions for trustee and appointor roles
- the philosophy behind distributions
- how beneficiaries should communicate concerns
- expectations regarding involvement in the family business
- protocols for conflict resolution.
It means that all beneficiaries are “on the same page” and it reduces emotional decision-making.
3. Clarify trustee and appointor succession
Succession for these roles should be explicitly documented. Consider:
- who should take over, and whether they have the skills
- whether multiple appointors or trustees should act jointly
- how disputes between co-appointors will be handled
- what happens if successors divorce, die, or become incapacitated.
4. Prevent power imbalances
Many disputes are triggered when one family member gains disproportionate control. Solutions include:
- using corporate trustees with independent directors
- appointor committees rather than a single appointor
- including “fit and proper person” requirements for decision-makers
- requiring successor training or external advice.
5. Document decision-making carefully
Courts expect trustees to act impartially and for proper purposes. Keeping clear records of decisions, especially when it comes to distributions, investments and amendments, can reduce the likelihood of misconduct allegations.
If you’d like support reviewing your trust governance or establishing a family charter, our team can guide you through the process.
