June 10, 2019 by admin
Search and recover … misplaced trust deeds can prove costly. Illustration: Karl HilzingerThe strategy: To find out whether there’s a potential problem with my family trust.
Is that likely? At last count, there were more than 600,000 family trusts in Australia, many of which were set up 20 or 30 years ago. So when was the last time you looked at the trust deed? Do you even know where it is?
A partner with Hall & Wilcox, Emma Woolley, says a growing number of people are looking to review or modernise their trust deeds and are discovering they don’t know where they are. The family may not have retained the original documents, or they may have been left with an adviser such as an accountant or lawyer that the family moved on from years ago, or they may have been damaged at some time.
Even worse, she says, some clients are seeing advisers to have their trusts reviewed, only to find they have matured and no longer exist. This can have significant tax and legal consequences and, ideally, you’d like time to plan for them, but if you don’t know when the trust matures it could be too late.
Why do I need the trust deed? Woolley says family trusts are much less flexible than companies, or even self-managed super funds. The trust deed is the document that sets out what the trustee can do and how the trust should be managed. She says the Bamford court decision of 2010 emphasised the importance of the trust deed in determining how income from the trust could be distributed. Prior to that decision, she says, people assumed all trusts were the same, but they’re not.
The Bamford decision centred around streaming of trust income – paying different types of income to different beneficiaries – and caused many families and their advisers to go back to their trust deeds to find out exactly what they said. But if you don’t have the trust deed, you can’t read it. And if you can’t read it, you can’t find out whether it needs to be updated.
”Some trusts have limitations or require a particular person’s consent to any changes,” she says. ”There’s a real risk that if you don’t know that, any changes you do make might not be effective.”
Woolley says she is also expecting a ”tidal wave” of litigation when trusts mature and family members, who have been tied together by the trust, fall out.
So what should I do? A good start, even if you don’t think the deed needs any changes, would be to track down the trust deed and ensure it is in a safe place. She says even if it doesn’t need any changes now, it may once the government review of how trusts are taxed is completed.
If you can’t find the original deed, Woolley says there is a risk the Tax Office might not believe it existed. In most cases, she says, clients are able to find enough documentation to give comfort that the trust exists. You may be able to find a copy of the original deed or some other form of evidence.
She says in one case, two brothers had established identical trusts at the same time with the same accountant. One brother had later moved his business (and trust deed) to a new accountant and lost track of the trust but had enough evidence to show his lost deed was identical to his brother’s.
If you have no evidence, she says, you can go through the court system to try to establish confirmation of a deed, but this is expensive and potentially risky.
Is it worth having a trust? Woolley says they are still useful vehicles for estate and succession planning, and for protecting an individual’s assets. But they have their own challenges and are ruled by the trust deed. So it’s a document to be taken care of.
This story Administrator ready to work first appeared on 苏州美甲学校.
Category 苏州美甲学校 | Tags:
Sorry, comments are closed.