Wednesday, May 19, 2010

Testamentary trusts - is it ever too late?

As you may recall from previous posts, there are significant advantages of utilising a testamentary discretionary trust (TDT) as part of an estate planning strategy.

We often receive queries from clients asking whether it is possible to establish a TDT to receive estate assets after a person's death.

While establishing a TDT in a person's will is by far the simplest approach, it is possible for an estate proceeds trust (or post-death TDT) to be established following a person's death to receive the estate assets.

Any property received from the estate may be transferred to an estate proceeds trust (EPT) within three years for the date of death, provided the trust is structured to satisfy the requirements in the tax legislation. 

The summary about EPT on the View Legal website is available via the View Legal website ( via the core services section and explains the requirements in further detail.

Practically, the area where we see the biggest demand for estate proceeds trusts is in relation to receiving insurance proceeds from life insurance policies.

Matthew Burgess

Monday, May 10, 2010

Trust distributions 101 - Read the deed!

Last week, an accountant and I caught up in relation to his review of trust distributions in previous years for a new client to his firm.

The main issue related to income that had been passed to a company over a number of years.

While the trust deed allowed distributions to companies, it had a relatively unusual provision that required all of the shares in that company to be owned by the 'primary beneficiaries' set out in the schedule.

Unfortunately the company that had been used had a share structure that did not comply with the provisions of the deed and we were trying to explore if there were some potential solutions available.

Each idea we have come up with to date has not been particularly satisfactory, so this week’s practical tip is simply to remember to ensure that whenever working with trust someone is made responsible to 'read the deed’.

Until next week.

Matthew Burgess

Tuesday, May 4, 2010

Deeds of variation and stamp duty

As I flagged in my last blog posting, we had a very difficult day recently – all triggered by a simple typo in the schedule to a trust deed.

One aspect that proved unnecessarily difficult due to the particular approach of the relevant bank officer was in relation to stamping.

Most Australian states (and particularly Queensland where this transaction was taking place) do not require administrative type changes to trusts to be charged with stamp duty.

In fact, in Queensland, recent changes have been made by the Stamps Office to actively discourage people from lodging these types of documents for assessment, given that the assessment is going to be returned as no duty payable.

Essentially then the only types of trust variations that need to be lodged for assessment in Queensland are ones that historically have been loosely described as 'resettlements'.

Practically, there is in fact no definition of a resettlement under the stamp duty rules and instead there is a series of other, relatively technical, provisions that need to be considered. For those interested in the general way in which these rules operate, please let me know and I can direct you to the relevant parts of the Stamps Office website.

Until next week.

Matthew Burgess