Cassandra Townsend, Lawyer
We've recently received a number of customer queries about
how a family trust works and how to set up a
family trust through Cleardocs.
A family trust is a type of discretionary trust generally
set up to hold a family's assets or conduct a family business. A family trust
structure can assist in providing asset protection and certain tax advantages.
Information on family trusts and
family trust elections are available on our website.
Below are some common customer queries about family trusts:
1. Can the sole trustee of the discretionary (family) trust also be the sole beneficiary?
2. Can a trust be a beneficiary under a family trust?
The Cleardocs Discretionary Trust deed is
only suitable if you wish to name individuals, local companies or incorporated
associations as beneficiaries. Maddocks does not recommend that trustees be
named beneficiaries because distributions from one trust to another may raise
issues in relation to the rule against perpetuities.
3. Can I update the deed of my discretionary trust?
Yes, however Cleardocs does not have a
product to update the deed of a Discretionary Trust. If you wish to amend your
discretionary (family) trust, you should engage a lawyer to draft the changes.
The lawyer will need to ensure the changes do not trigger the creation of a new
trust and that the relevant variation process described in the deed is
followed.
4. Is the Cleardocs Discretionary Trust compliant with the Bamford ruling and/or change to laws regarding streaming provisions for trusts?
Yes.
o
The deed contains an appropriate definition of
income - since 13 December 2004, Cleardocs deeds adopt a definition equivalent
to taxable income ("net income" under taxation law).
o
The deed contains a specific power for the
trustee to determine whether receipts are to be treated as on account of
capital or income. All Cleardocs deeds since Cleardocs launched in 2002 provide
this discretion.
o
The deed contains a specific power for the
trustee to determine whether to adopt an alternate definition of income in
respect of a year of income by signing a minute to that effect (or taking some
other action). Again, this feature was introduced into Cleardocs deeds in
December 2004.
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