Reserved powers

What a reserved power is

Something you keep after transferring assets to the trust. The general rule: reserve the minimum you can tolerate. Each retained power is a point of control, and each point of control is an argument a court can use when assessing whether you genuinely cannot comply with a repatriation order. The International Trusts Act gives no exhaustive list; the practical constraint comes from what courts have found when examining specific retained powers.

Powers fatal in practice

The power to remove and appoint the trustee, held by the settlor. Lawrence v Goldberg failed partly on this. Held by a genuinely independent protector it is different.

Serving as co-trustee. FTC v Affordable Media failed because the Andersons were co-trustees. Co-trusteeship is the mechanism of control, not a constraint on it.

Serving as your own protector. The veto and removal powers must sit with someone genuinely independent.

Bank signatory on trust accounts. Courts treat direct account access as practical control.

Powers usually acceptable

Investment direction through an underlying company. The settlor acts as manager within limits the trustee sets. The trustee retains the ability to remove the manager. This is the standard model.

The power to add beneficiaries. Expanding who might benefit is not directing assets toward the settlor.

The power to change the trust principal place of administration. Moving the trust is a different act from retrieving assets.

The audit question

Before retaining any power, ask: what sequence of steps does this power ultimately allow? Not the direct effect but the full chain of intermediate acts. Lawrence retained a power to appoint a trustee, who could revoke his excluded-person status, allowing him to benefit. Two steps, and the court followed them. Map the full sequence for every reserved power. If it ends with assets accessible to you, the power is unsafe.

See the impossibility defence and the trust deed.