Trust Deeds...When was the last time you had yours reviewed?
Do you have any Trusts? If so, when was the last time yours was reviewed?
Trusts Deeds are another document easy to set and forget! But why should you make it a habit to have your Trust Deed reviewed regularly?
There have been so many changes in legislation regarding taxation on trusts and the interpretation of wording of trusts which could mean without realising, the Trustee of the trust may not be administering the Trust in accordance with the rules of the trust.
Alongside this, changes in circumstances of the beneficiaries or trustee could mean that the Trust is not being administered correctly, distributing to the incorrect beneficiaries, or there could be beneficiaries no longer eligible to receive distributions from the Trust that are still receiving distributions, and more.
What circumstances could change that may result in the Trust not being correctly administered?
Changes to a Trustee or Beneficiary company such as de-registration of the company, change of company name or sale/transfer of a company;
Having a broad definition of who the Beneficiaries are. For example, does the term ‘children’ include step-children? Does family members of the “Smith Family” include grandchildren, children under 18 years old, new spouses to a family member?
The trustee dealing with the property or funds in a manner that the Trust Deed does not give the Trustee the power to do:
Changes in legislation that may impact tax obligations of the Trust for instance the changes to the Foreign Resident legislation for trusts;
Having no clauses in the Trust Deed to allow for succession of the Trust;
Death or incapacity of an existing Trusee
There are so many different circumstances that could trigger a requirement for a Variation of Trust.
What are the consequences of not administering the Trust Correctly?
The Trustee can be held liable for any loss incurred by the trust or the beneficiaries. There can be significant taxation implications and penalties for incorrect distributions in the trust also.
If any of the points above made you go ‘hmmm’ or you are unsure, you better call Trish! She LOVES trusts!
Whether you are looking to create a Trust, or think it is time you had yours reviewed, contact our team today. Having this done now could save you a lot of time, headache and money down the track!