Trust Law Solicitors Sunshine Coast
Need to set up a family trust or other type of trust, simply require some trust law advice? Contact our Butler McDermott solicitors on the Sunshine Coast to arrange an appointment.
What is a trust?
A ‘trust’ is the common word given to an array of different arrangements that can be made to deal with property (including money) belonging to a settlor. Those arrangements can be voluntary and made when a person is alive or they can be involuntary, such as when the person dies without a will.
It is perhaps best to think of a trust as a way that property is held by one person (the trustee) ‘on trust’ and for the benefit of another person/s (the beneficiaries). The purpose of the trust is to benefit the beneficiaries and the trustee has an obligation to manage the property of the trust in a way that they reasonably believe is to the benefit of the beneficiaries.
The trustee will hold the legal interest in the property and be able to deal with it as such. The beneficiaries hold an equitable interest in the property. It is obviously paramount that the beneficiaries have the trust and confidence in the trustee to deal with the property properly. That is a trust in it most basic form.
The usual reasons to set up a family trust or other type of trust is for asset protection and tax minimisation. There are many variants on the basic form of a trust and the best setup will depend on the identity of the trustee/s, the beneficiaries and the property involved in the trust.
Types of Trusts
The most common form of trust law in Australia is a family trust, which is used to deal with property and distributes income to members of a family. The typical setup is that mum and dad are trustees and also named beneficiary’s, together with the children. It is usually a discretionary trust, which means that a named beneficiary could receive all of the trust income, or none of the trust income. That family trust is ordinarily the most beneficial from taxation perspective and also provides very good asset protection in case a beneficiary owes money to a third party, becomes bankrupt.
To create a trust, you’ll need a trust deed which establishes the trust itself and identifies the trustee/s and beneficiary/ies. It will also set out the purpose of the trust and regulate how the trustee can and can’t deal with the trust property. The trust deed needs to properly executed by the settlor and the trustee, be lodged and stamped by the Office of State Revenue. The trust will then be created and will be treated as it’s own legal entity, you will need an tax file number (TFN) and an Australian business number (ABN) and open up a bank account to deposit the initial settlement sum nominated by the settlor.