Tuesday, April 9, 2024

Trust deed without a power to vary: you'd better run, run, run** to court

View Legal blog - Trust deed without a power to vary: you'd better run, run, run** to court by Matthew Burgess

Posts over recent weeks have considered the issues about varying a trust that has no, or an inadequate, power to vary.

An iteration on the theme is set out in the decision of Budumu Pty Ltd [2021] NSWSC 522.

In this case a power to vary was granted under the trust instrument, however it was only able to be relied on during the life time of 2 named (primary) beneficiaries; both of whom had died by the time the variation was required.

Court approval was therefore needed, and granted, in order to ensure the trust avoided the land tax surcharge in relation to foreign beneficiaries.

A further example is provided in the decision of Casibond Pty Ltd: In the matter of George Tsivis Family Trust [2021] NSWSC 320. In this case, a trust deed had no formal power of variation, however did have the following provision:

'(The Trustee may) generally, determine all matters as to which any doubt, difficulty or question arises in relation to the Trust Fund and every such determination shall bind all parties interested in the Trust, but nothing in this sub-clause shall prevent the Trustee or any person interested in the Trust Fund from applying to the Court.'

This provision was held to be insufficient to allow the trustee to avoid the application of the foreign beneficiary surcharge, however again the court approved steps allowing the desired outcome.

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** For the trainspotters, the title of today's post is riffed from the Hunters and Collectors song 'Run, Run, Run'.

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