Are trusts still useful post Spry?

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Are trusts still useful post Spry?’ at the following link - https://www.youtube.com/watch?v=IjcRGemWHyk

As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –

Certainly, immediately following Spry, for an extended period, the usefulness of trusts was under the spotlight and there was significant nervousness about how robust they actually were going to be.

The reality has been that this conclusion has been tempered by the combination of firstly the fact that Spry is a bit of an outlier decision and actually driven a lot by factual scenario, which is a relatively strange set of circumstances, and the fact that there have been so many cases since Spry that have respected the integrity of trusts.

Therefore, it is generally accepted that all forms of trusts, particularly testamentary trusts, will remain the vehicle of choice in estate planning context at least for the foreseeable future.

Binding financial agreements and trusts

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Binding financial agreements and trusts’ at the following link - https://www.youtube.com/watch?v=dS8CjyW0hUY

As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –

There is no doubt that a properly crafted binding financial agreement or 'BFA' provides the best protection from an asset protection perspective available.

The difficulty is that even despite the changes that the government has brought in to make binding financial agreements more robust, the reality is there is a level of scepticism about just how useful BFAs are actually going to be, because there seem to be so many ways in which they can be unwound on a technicality.

While the general view is that they are the ideal outcome in terms of protecting wealth, the conservative view would always be that steps are taken to complement the BFA and to try and ensure the assets are ultimately quarantined on a relationship breakdown. One obvious example is to implement testamentary discretionary trusts under the estate plan, regardless of whether a BFA is in existence.

Overseas assets and estate planning

Where a will maker has assets both in Australia and overseas, there are a number of specific estate planning steps that should be adopted.

In summary, these include:

1. It is generally preferable to commence the estate planning process in the jurisdiction that the will maker is currently living. 


2. The completed estate planning documents should be signed in the normal way and then provided to a specialist adviser in any other jurisdiction where substantial assets are held. 


3. While initially the will first prepared should apply to all assets worldwide, generally when documentation is implemented in other jurisdictions, each will should be amended so as to only apply to assets in the relevant jurisdiction. 


4. Wherever possible, the signing and witnessing procedure for the jurisdiction to which the will applies should be followed. Alternatively, it will generally be permissible for the will to be signed and witnessed in accordance with the laws of the country where the will maker signs the document and still be valid worldwide. 

The above approach ultimately ensures that the client has:

1. appropriate estate planning documents for each Country in which they retain wealth; and


2. received the necessary succession and tax advice for each asset in each Country.

Image credit: xlibber cc

Lessons from the Family Court case of Essex

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Lessons from the Family Court case of Essex’ at the following link - https://www.youtube.com/watch?v=McHPGXipl2I

As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –

While Essex hasn’t probably received as much media attention as the Spry decision, in some respects, it's arguably the leading decision in the family law space in relation to trusts.  As usual, a full copy of the decision is available here http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FamCAFC/2009/236.html?stem=0&synonyms=0&query=essex.

The husband in Essex:

a          was not the trustee of the structure;

b          had not really received any distributions; and

c          had not contributed to the assets of the trust being generated in the first place as they had come down the family line.

Despite these facts, the court still held the assets to be the husband's resource and therefore took into broad account the terms of matrimonial property settlement. 

Importantly though, the assets were not considered property. That was a very important part of the decision, because the court also found that despite the fact that the husband did not have any control over the structure and had yet to receive any benefit, there was absolutely clear evidence that he would ultimately receive it, in the court's opinion. 

While on the face of the decision, Essex was probably a 'loss' for the husband, the reality is that the decision supports this idea that trust structures will only be attacked where the court believes that it is absolutely legitimate in the circumstances and in any other scenario that the integrity of the trust structure will be respected and the assets will, therefore, be protected.