Most families don’t expect disputes to arise within their trust, especially when its purpose is to protect wealth and support loved ones. With clear communication and a shared understanding of roles, rights and responsibilities, trusts can operate smoothly and continue to achieve their intended purpose for generations.
A little thoughtful upfront planning can help protect both relationships and assets.
Clearly defining roles, expectations and powers helps ensure a smooth transition – particularly during significant life events, such as the passing 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 make a meaningful difference.
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; and
- 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, providing clear information about beneficiaries’ rights and trustee powers can help families feel more confident about how a trust is managed. Open conversations about succession and future control can support long-term harmony and certainty.
In the long term, a charter helps provide continuity as family members age or retire, giving younger family members clear guidance on their roles and responsibilities.
Trustee succession planning
Recent court cases have highlighted the value of having clear, agreed-upon rules and open communication, particularly when planning for succession.
The long-term stability of a trust is strengthened by having a clear plan for future leadership and decision-making if the original trustee, appointor, or guardian passes away, loses capacity, or steps back. Taking time to consider succession planning helps support continuity and gives families greater confidence about the future.
The Cardaci dispute, an eight-year legal battle resolved by the High Court in 2024, highlights how complex trust control can become without long-term planning. The case involved family members disputing the trustees’ administration, decision-making powers, and conduct in a long-running family business. It demonstrates how questions about control and succession can escalate trust structures and governance arrangements are not reviewed and updated regularly.
Preventing disputes
Avoid the “set and forget” approach to trusts. Staying up to date with changing family circumstances, evolving needs, and new expectations can help prevent unnecessary costs, stress and complications in the future.
Key considerations
Here are five key considerations to help ensure a trust structure remains well governed, responsive to changing circumstances, and better positioned to manage future risk and family expectations.
1. Review the trust deed regularly
Trusts that were established many years ago may contain outdated provisions or beneficiary definitions that no longer reflect current family or business circumstances. Major life events, such as marriage, divorce, death or business restructuring, are good opportunities to review the trust deed and ensure it continues to meet its intended purpose.
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; and
- Clear processes for managing and resolving disputes if they arise.
It means that all beneficiaries are “on the same page” and helps reduce 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; and
- Planning for unexpected events affecting successors, such as relationship changes, death, or incapacity.
4. Prevent power imbalances
Family disputes can sometimes arise when control becomes concentrated in the hands of a single individual. Possible ways to help manage this risk include:
- Using corporate trustees with independent directors;
- Appoint committees rather than a single appointor;
- Consider suitability standards, such as a “fit and proper person” test, for key decision-makers; and
- Requiring successor training or external advice.
5. Document decision-making carefully
Trustees are encouraged to act impartially and for proper purposes, and maintaining clear records of key decisions, including distributions, investments, and amendments, helps demonstrate good governance and supports confidence in the decision-making process.
Next steps
If you would like support reviewing your trust governance or developing a family charter, speak with your local Nexia Adviser today. We can help you navigate the process and work with you to strengthen your structure for the future.
