Review of Family Trusts for Succession

Family trusts are often discretionary trusts that are set up to hold a family’s assets, or protect the interests of a family business. In general, they are established for asset protection and income tax minimisation. Many people use trusts as a way to protect their family’s assets, and every family trust document is different. Family trusts are created through deeds, and these deeds determine the governance and operation of the trust, and powers of the trustee.

A family trust is one that:

  • Is usually established for the benefit of family members and to hold inheritances
  • Can help to protect assets from liabilities – for instance, bankruptcies or insolvencies of family members or companies
  • Provides a way to ensure family assets are passed on to future generations
  • Provides a means for the family to access favourable taxation treatment, through income splitting and deferring capital gains.

How Family Trusts Work

Family trusts function as a planning vehicle during parents’ lifetimes. Family trusts allow for the distribution of income and capital among existing and future family members.

The circumstances of a family may change with events such as marriage, birth, death or insolvency. It is advised that clients review their trust deeds to ensure that their wishes for succession planning are effective, and in place.

Like superannuation funds, any assets held in family trusts are not beneficially owned by parents, and cannot be dealt with in their Wills.

Why we Recommend Reviewing Your Family Trust

There are no simple forms through which the assets of a family trust can be dealt with or transferred. The trust will continue until the Trustee winds up the trust fund or upon the expiry period of the trust, which is 80 years from the establishment of the trust. A trustee’s resolution is required to distribute income or parts of the capital of the trust fund in any one financial year.

At Home Legal reviews trust deed provisions regarding the distribution of capital, income, trustee and appointor provisions. These provisions determine how the trust is to operate and how the assets of the trust may be distributed.

The review addresses the transfer of positions of control over the trust such as the successor to positions of Trustee and Appointer. We also consider transfer of shares in a company that acts as the trustee of the family trust.

If you anticipate that your family trust will continue in use then we recommend a review of the trust’s provisions to ensure that the trust will continue to operate effectively for the benefit of you and the next generation. We can also arrange to have your trust deed updated for tax purposes. Claire Dunning can help conduct a review of your family trust deed to enable a handover of control over assets of the family trust to intended beneficiaries.

Find Effective Legal Advice with At Home Legal on Any Matters Involving Your Family Trust.

If you are not sure that your family trust deed is in order, consult At Home Legal for help.

Speak with Claire Dunning today, to arrange a consultation at 0422 490 811 and learn how you can benefit by having qualified and reliable legal advice.