One Trust or Two?
Family Wealth & Estate Planning
So, you’ve written your Will and decided that a family discretionary trust is the right way to protect and transfer wealth for future generations. A trust provides flexibility to handle life’s uncertainties and the “unknown unknowns.”
When establishing a trust, there are key questions to answer from the outset:
Where will the trust be established?
What assets will go into it?
Who will be the settlor(s) and who will act as trustee(s)?
Will a protector be appointed and what will their role be?
Who are the beneficiaries?
How will trustees know your intentions and reasons for setting up the trust?
Family Dynamics and Wealth Distribution
For many families, wealth planning is tied to both fairness and practicality. For example, in a family business, some children may work within the company while others pursue careers elsewhere. A trust can be structured to ensure fair treatment by balancing business assets with other financial benefits.
Often, this is expressed through a Letter of Wishes, guiding trustees on how wealth should be distributed. However, life is rarely straightforward. Trustees may have already made appointments of funds or benefits to certain beneficiaries. Over time, differences in needs and expectations between siblings can create tension, particularly where tax or legal considerations differ between beneficiaries living in different jurisdictions.
One Trust vs. Multiple Trusts
When complications arise, trustees may consider either:
Creating sub-trusts within the main trust, or
Appointing funds to entirely new trusts for each beneficiary.
While sub-trusts keep everything under one umbrella, they can result in tax complexities. Independent trusts, by contrast, create clean separation but require more administration.
Which Approach is Best?
The right structure depends on your family circumstances and what is being placed in trust. Options include:
One trust initially, with the flexibility to establish others later.
Multiple trusts from the outset, with assets distributed accordingly.
Creating new trusts if family needs evolve.
Even scenarios such as the death of a child without heirs can be accommodated — with trust provisions allowing wealth to pass to other family members.
Ultimately, whether you need one trust or more depends on your family’s unique situation and long-term goals.
To discuss the right trust structure for your family, contact us