Many of the trusts that View (and other law firms) establish contain a provision in them that we call an ‘automatic disqualification’ provision.
The provision is drafted to ensure that anybody in a key role, such as an appointor, principal or trustee, will get automatically removed from that role upon certain events happening to them.
The most common disqualification scenario is death or incapacity.
If you’ve got a trustee who becomes incapacitated or dies, then obviously they need to be removed and someone else needs to step into that role to manage the trust.
However, those triggering events can also include a family law breakdown. We have an optional clause in our trust deed or our will saying that if the appointor, principal or the trustee separates from their spouse, then they are automatically disqualified from that role and somebody else steps in in their place. This provision only applies where the appointor, principal or trustee is an individual.
Where the appointor, principal or trustee is a corporate entity, then a similar provision can, on request, be included in the constitution for that entity, to apply to the directors.
View is not aware of any instances where the effectiveness of that type of clause has been tested before a Court, however we think it has reasonable grounds of being held to be valid if it is tested.
When View is asked to give advice on this issue in a particular factual scenario we will often include this type of provision on the basis it gives our client a fighting chance of retaining ultimate control of the trust if anything goes wrong for them personally, since they didn’t actually make that change to the control of the structure themselves.
As usual in these areas, specific specialist advice should always be obtained if there is any doubt as to the consequences or appropriateness of the provisions. As one example, thought should be given to having a backup appointed to step in if the initial person appointed is automatically disqualified.