The Leading Member Discretionary Trust and its many options is the only trust enabling the protection of family wealth for bloodline family members for generations to come. It should be noted that some families do not want their bloodline family in the trust or limit it to some of their bloodline – this can be achieved by excluding beneficiaries or a class of beneficiaries.
The key to the Leading Member Discretionary Trust is that a person or persons are appointed as Leading Member Appointors – monarchs of the Trust. Although the trustee retains legal control over the assets, the leading member is granted significant influence over how and to whom the benefits are distributed.
Functionality: The trust functions by allowing the leading member to guide the trustee in making decisions regarding the distribution of assets and income. This is often facilitated through carefully drafted provisions in the trust deed, allowing the leading member to provide non-binding recommendations to the trustee.
Unique Features: Unlike a standard discretionary trust, the Leading Member Discretionary Trust specifically empowers a designated individual to have substantial sway over the trust's operations. This can ensure that the family's wealth is managed and distributed in line with the leading member's vision and values.
Succession: When the Leading Member Appointor dies, divorces, is disabled or in litigation, criminal or legal troubles they can resign, or the role passes to the next Leading Member Appointor.
LMDT - Benefits for Family Wealth Protection
Enhanced Control: The leading member has a significant influence over the Trustee and various aspects of the Trust, ensuring assets are managed according to the family's long-term objectives.
Asset Protection: By distancing assets from the personal estate of family members, the trust provides a shield against creditors, divorce settlements, and legal disputes.
Succession Planning: It facilitates smooth generational wealth transfer, ensuring that the family's wealth management strategies continue even after the leading member's death.
Flexibility: The trust can adapt to changing circumstances and beneficiary needs, without the rigidity often found in other family wealth protection structures.
Tax Efficiency: Carefully structured distributions can optimise the tax position of beneficiaries, potentially reducing the overall tax burden on the family's assets.
Case Study:
John Smith is the family patriarch and has amassed $3M of property and shares in the Smith Leading Member discretionary trust. John passes away suddenly and like the British Monarchy, his wife Sally takes over the position of Leading Member Appointor and becomes director of the trustee company. Next in line is Max Smith, their eldest son if Sally wants to retire or something happens to Sally. Importantly if Sally meets a new friend and they get involved they are excluded from participating in the Trust as they are not bloodline of John or Sally. With an Abbott and Mourly Leading Member discretionary trust, relationships are for love not money.
The Leading Member Discretionary Trust is a sophisticated tool, combining the protective features of a discretionary trust with enhanced control mechanisms. It's particularly beneficial for families seeking to maintain a centralised, guided approach to their wealth management and protection strategies.
You can find more information in the video section for Legacy Builders at www.sapepaa.org.au