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Trusts

FED

This publication covers the establishment, amendment, termination, revocation, and dissolution of a trust.

2 Matter Plans

Overview

The commentary covers the various types of trust structures, including discretionary, unit, hybrid, charitable and special disability trusts, as well as the rights and obligations of beneficiaries and the role of individual and corporate trustees. It also provides guidance on taxation requirements and dispute resolution.

The Reference materials folder includes guidance on electronic signing and witnessing, and the comprehensive Getting the matter underway folder includes compliance and client care documents. Using the extensive Retainer Instructions when gathering information ensures nothing is missed.

The Business Structures and the Comparative Table guide provides a comparison of the pros and cons of different business structures.

Precedents in this publication include:

  • Discretionary trust deed;
  • Deed amending discretionary trust;
  • Unit trust deed;
  • Unit holders agreement;
  • Hybrid trust deed;
  • Charitable trust deed;
  • Special disability trust deed;
  • Deed of variation for special disability trusts;
  • Deed of termination of trust;
  • Deed of removal and appointment of trustee.
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2 Matter Plans Included

  • Item icon ALERTS - Nil
  • Item icon Full Commentary - Trusts
  • Folder icon Reference materials
    • Item icon AI Prompts
      An AI prompt defines a specific task for AI to perform, like drafting a particular document, and provides clear instructions on how to execute that task. The goal is for the AI to quickly create a useful first draft of a document, which the user verifies and refines into a final version, ultimately ...

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    • Item icon Looking to the Future
    • Item icon Electronic Signing and Witnessing
    • Item icon 101 Costs Answers
    • Item icon Business Structures and the Comparative Table
    • Item icon Further information
  • Item icon Overview
    A trust separates property ownership into two components: legal ownership, also known as technical ownership, and beneficial ownership. A trustee is the technical owner who holds property on trust for the beneficial owner or owners.

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  • Folder icon A. Getting the matter underway
    • Item icon File cover sheet - Trusts
    • Item icon To do list - Trusts
    • Item icon First steps
    • Item icon Client details and verifying identity
    • Item icon Retainer instructions - Trusts
    • Item icon Conflict of interest check
    • Item icon Initial letter to client enclosing costs agreement - Unit trust
    • Item icon Initial letter to client enclosing costs agreement - Discretionary trust
    • Item icon Time and costs estimates
    • Folder icon If required - Updating costs disclosure
      • Item icon Letter to client updating costs disclosure
      • Item icon Charge securing costs
      • Item icon Guarantee securing costs
      • Folder icon Costs disclosure before settlement in litigation matters
        • Item icon Letter to client - Costs disclosure before settlement - NSW, VIC, and WA
        • Item icon Letter to client - Costs disclosure before settlement - QLD, SA, TAS, ACT, and NT
    • Folder icon Library of costs agreements
      • Folder icon Australian Capital Territory
        • Item icon Costs agreement - ACT
      • Folder icon New South Wales
        • Item icon Costs agreement - NSW
      • Folder icon Northern Territory
        • Item icon Costs agreement - NT
      • Folder icon Queensland
        • Item icon Initial letter to client enclosing costs agreement
        • Item icon Costs agreement - QLD
        • Item icon Abbreviated costs disclosure - Costs under $3000
      • Folder icon South Australia
        • Item icon Costs agreement - SA
      • Folder icon Tasmania
        • Item icon Costs agreement - TAS
      • Folder icon Victoria
        • Item icon Costs agreement - VIC
      • Folder icon Western Australia
        • Item icon Costs agreement - WA
        • Item icon Standard costs disclosure form for clients - Fees under $3000
    • Item icon Scope of work - Trusts
    • Folder icon General deeds, agreements, execution clauses, and statutory declarations
      • Item icon Deeds and Agreements
      • Folder icon Deeds
        • Item icon Deed for general use
        • Item icon Deed of guarantee
        • Item icon Deed of release
        • Item icon General deed of indemnity
        • Item icon Deed of assignment of agreement
        • Item icon Deed of gift
        • Folder icon Library of standard clauses for deeds
          • Item icon Amendment
          • Item icon Confidentiality for defined information - All parties
          • Item icon Confidentiality for defined information - One party
          • Item icon Confidentiality for terms of deed - All parties
          • Item icon Confidentiality for terms of deed - One party
          • Item icon Costs
          • Item icon Counterparts
          • Item icon Dispute resolution
          • Item icon Events beyond control
          • Item icon Governing law and jurisdiction
          • Item icon Interpretation
          • Item icon No assignment
          • Item icon Notices
          • Item icon Severance
          • Item icon Waiver
          • Item icon Whole agreement
      • Folder icon Agreements
        • Item icon Agreement for general use
        • Item icon Heads of agreement
        • Item icon Non-disclosure agreement - Formal
        • Item icon Non-disclosure agreement - Informal
        • Folder icon Library of standard clauses for agreements
          • Item icon Amendment
          • Item icon Confidentiality for defined information - All parties
          • Item icon Confidentiality for defined information - One party
          • Item icon Confidentiality for terms of agreement - All parties
          • Item icon Confidentiality for terms of agreement - One party
          • Item icon Costs
          • Item icon Counterparts
          • Item icon Dispute resolution
          • Item icon Events beyond control
          • Item icon Governing law and jurisdiction
          • Item icon Interpretation
          • Item icon No assignment
          • Item icon Notices
          • Item icon Severance
          • Item icon Waiver
          • Item icon Whole agreement
      • Folder icon Execution clauses
        • Folder icon Library of execution clauses for agreements
          • Item icon Attorney
          • Item icon Authorised officer
          • Item icon Company
          • Item icon Company - Sole director
          • Item icon Individual
          • Item icon Individual - No witness
        • Folder icon Library of execution clauses for deeds
          • Item icon Attorney
          • Item icon Authorised officer
          • Item icon Company
          • Item icon Company - Sole director
          • Item icon Individual
      • Folder icon Statutory declarations
        • Item icon Commonwealth statutory declaration
        • Item icon Statutory declaration - blank - ACT
        • Item icon Statutory declaration - blank - NSW
        • Item icon Statutory declaration - blank - VIC
        • Item icon Statutory declaration - blank - QLD
        • Item icon Statutory declaration - blank - TAS
        • Item icon Statutory declaration - blank - SA
        • Item icon Statutory declaration - blank - WA
        • Item icon Statutory declaration - blank - NT
        • Item icon Standard annexure note for documents
      • Item icon Standard annexure note for documents
  • Folder icon B. Trusts generally
    • Item icon Establishing a trust
      Establishing a trust generally requires:

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    • Item icon Parties to a trust
      Settlor The settlor is an independent person who creates the trust. This role is often performed by the legal practitioner who prepares the trust documents or another unrelated party.

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    • Item icon Trust deed and settling the trust
      Most trusts are established and governed by a trust deed. The trust deed:

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    • Item icon Duty and lodgement of the trust deed
      Duty requirements and fees for trust deeds vary throughout Australia. The duty payable also varies depending on the type of property held by the trust. The following table sets out the procedure for assessment of duty in each jurisdiction.

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    • Item icon Amending a trust deed
      Circumstances requiring amendment of a trust deed can arise frequently during the life of a trust. These circumstances include:

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    • Item icon Vesting or termination of a trust
      A trust can be brought to an end by:

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    • Item icon Taxation of trusts generally
      This commentary is focused on:

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    • Item icon Duty and declarations of trust
      Section 8 of the Duties Act 1997 (NSW), and similar laws in other jurisdictions, imposes duty on a declaration of trust over dutiable property. This duty is particularly relevant to discretionary trusts and unit trusts.

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    • Item icon Comparison of discretionary trusts and unit trusts
      Both discretionary trusts and unit trusts offer different taxation, asset protection, and administrative advantages and disadvantages.

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    • Item icon Trust deed review checklist
  • Folder icon C. Discretionary trusts
    • Item icon Discretionary trusts
      The trustee of a discretionary trust has discretion over distribution of the trust’s property to beneficiaries. The power of appointment is at the core of the discretionary trust relationship. This power, conferred inter vivos or by a will, vests authority in a person to deal with, dispose of, and ...

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    • Item icon Establishing a discretionary trust
      The general requirements under Establishing a trust apply to a discretionary trust. Specifically, a discretionary trust requires at least:

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    • Item icon Discretionary trust deed
      A discretionary trust is distinguished by a broad class of beneficiaries and a trustee’s broad discretion in managing the trust. Both should be identified in the trust deed.

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    • Item icon Discretionary trust deed - Appointor
    • Item icon Discretionary trust deed - No appointor
    • Item icon AI Prompt for Letter to client with advice on discretionary trust deed
    • Item icon Minutes of meeting - Company accepting trusteeship
    • Item icon Amending a discretionary trust deed
      The procedure for amendment of a trust deed – by further deed, resolution, or written notice – must be determined before the deed is amended. See Amending a trust deed. A discretionary trust deed is usually amended by the trustee but may be amended by the appointor.

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    • Item icon Deed amending discretionary trust
    • Item icon Clause - No foreign person to benefit amendment
    • Item icon Deed of retirement of trustee
    • Item icon Removal and replacement of a trustee
      A discretionary trust’s deed commonly provides for the removal of a trustee and appointment of a new trustee by the appointor. Notice of a trustee’s removal and replacement must be given to the nominated beneficiaries.

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    • Item icon Deed of removal and appointment of trustee
    • Item icon Deed of nomination of new appointor
    • Item icon Dispute resolution
      Discretionary trusts are favoured asset protection tools for many privately held family businesses. However, they can become the subject of a wide array of disputes, particularly trusts that have complex financial arrangements and complicated family dynamics. Disputes that can arise over internal ...

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    • Item icon Vesting of a discretionary trust
      Trusts are required by law to vest and end after 80 years in each jurisdiction except South Australia, which has no law against perpetuities. See Vesting or termination of a trust. Deeds for a discretionary trust commonly provide for an earlier vesting date or link the vesting of the trust to ...

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    • Item icon Deed of termination of trust
    • Folder icon Trust deed duties forms and lodgement requirements
      • Folder icon NSW
        • Item icon Electronic Duties Returns
        • Item icon Statutory declaration - blank - NSW
      • Folder icon NSW
        • Item icon Electronic Duties Returns
        • Item icon Statutory declaration - blank - NSW
      • Folder icon VIC
        • Item icon Lodge a declaration of trust through Duties Online (DOL)
      • Folder icon VIC
        • Item icon Lodge a declaration of trust through Duties Online (DOL)
      • Folder icon QLD
        • Item icon Dutiable transaction statement
        • Item icon Annexure - identity details
        • Item icon Trusts and transfer duty - Queensland Government
        • Item icon Statutory declaration - blank - QLD
      • Folder icon QLD
        • Item icon Dutiable transaction statement
        • Item icon Annexure - identity details
        • Item icon Trusts and transfer duty - Queensland Government
        • Item icon Statutory declaration - blank - QLD
      • Folder icon SA
        • Item icon Application for stamp duty assessment
        • Item icon RevenueSA - Notification of land held on trust form
        • Item icon RevenueSA online
      • Folder icon SA
        • Item icon Application for stamp duty assessment
        • Item icon RevenueSA - Notification of land held on trust form
        • Item icon RevenueSA online
      • Folder icon ACT
        • Item icon ACT Revenue Office - Self assessment tools and forms
      • Folder icon ACT
        • Item icon ACT Revenue Office - Self assessment tools and forms
      • Folder icon NT
        • Item icon Northern Territory Government - Stamp duty lodgement guide
        • Item icon Stamp duty lodgement form
        • Item icon Statutory declaration - blank - NT
      • Folder icon NT
        • Item icon Northern Territory Government - Stamp duty lodgement guide
        • Item icon Stamp duty lodgement form
        • Item icon Statutory declaration - blank - NT
      • Folder icon WA
        • Item icon Duties Online Services Portal
        • Item icon Office of State Revenue WA - Duties information requirements
        • Item icon Statutory declaration - blank - WA
      • Folder icon WA
        • Item icon Duties Online Services Portal
        • Item icon Office of State Revenue WA - Duties information requirements
        • Item icon Statutory declaration - blank - WA
      • Folder icon TAS
        • Item icon Statutory declaration - blank - TAS
      • Folder icon TAS
        • Item icon Statutory declaration - blank - TAS
  • Folder icon D. Unit trusts
    • Item icon Unit trusts
      A unit trust is a type of fixed trust commonly used in business and investment settings involving a venture between unrelated parties or parties at arm’s length. A unit trust is distinguished from other types of trusts by the rights of the beneficiaries, known as unitholders, to the trust income ...

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    • Item icon Units versus shares
      Units in a unit trust structure often are compared to shares in a company. As with shares in a company:

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    • Item icon Fixed and non-fixed unit trusts
      The distinction between fixed and non-fixed unit trusts is important for tax planning purposes. See Taxation of unit trusts under Taxation.

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    • Item icon Common uses for unit trusts
      Unit trusts are used for:

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    • Item icon Establishing a unit trust
      The general requirements under Establishing a trust apply to a unit trust. Specifically, a unit trust:

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    • Item icon Unit trust deed
      Like all trusts, unit trusts are established and governed by a trust deed. See Trust deed. A unit trust deed must identify the vesting date of the unit trust.

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    • Item icon Settling the trust
      A trust is established, or settled, when:

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    • Item icon Taxation of unit trusts
      In addition to the requirements and considerations related to trusts generally, unit trusts are subject to specific taxation treatment.

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    • Item icon Unit trust deed
    • Item icon Unit trust deed - NSW and VIC land tax threshold eligible
    • Item icon Unit trust deed - Providing for different classes of units
    • Item icon AI Prompt for Letter to client with advice on unit trust deed
    • Item icon Unit holders agreement
    • Item icon Application for issue of units
    • Item icon Unit certificate
    • Item icon Shareholders and unitholders agreement
    • Item icon Transfer of units in unit trust
    • Item icon Agreement for sale of units in a unit trust
    • Item icon Application for redemption of units
    • Item icon Resolution to redeem and issue units
    • Item icon Subscription and securityholders agreement
    • Item icon Deed of retirement of trustee
    • Item icon Vesting or termination of a unit trust
      A unit trust deed identifies the vesting date of the unit trust. The deed typically enables the trust to be wound up or terminated at any time if the trustee brings the vesting day forward or distributes the trust property. Often the trust deed will provide for the unitholders to agree to wind up ...

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    • Item icon Deed of termination of trust
    • Folder icon Trust deed duties forms and lodgement requirements
      • Folder icon NSW
        • Item icon Electronic Duties Returns
        • Item icon Statutory declaration - blank - NSW
      • Folder icon VIC
        • Item icon Lodge a declaration of trust through Duties Online (DOL)
      • Folder icon QLD
        • Item icon Dutiable transaction statement
        • Item icon Annexure - identity details
        • Item icon Trusts and transfer duty - Queensland Government
        • Item icon Statutory declaration - blank - QLD
      • Folder icon SA
        • Item icon Application for stamp duty assessment
        • Item icon RevenueSA - Notification of land held on trust form
        • Item icon RevenueSA online
      • Folder icon ACT
        • Item icon ACT Revenue Office - Self assessment tools and forms
      • Folder icon NT
        • Item icon Northern Territory Government - Stamp duty lodgement guide
        • Item icon Stamp duty lodgement form
        • Item icon Statutory declaration - blank - NT
      • Folder icon WA
        • Item icon Duties Online Services Portal
        • Item icon Office of State Revenue WA - Duties information requirements
        • Item icon Statutory declaration - blank - WA
      • Folder icon TAS
        • Item icon Statutory declaration - blank - TAS
  • Folder icon E. Hybrid trusts
    • Item icon Hybrid trusts
      A hybrid trust combines the features of both fixed and discretionary trusts. Most hybrid trusts aim to combine the more favourable features of both types to create a more flexible structure. Hybrid trusts can be used in various business and investment settings.

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    • Item icon Trust deed
      A hybrid trust deed gives the parties certainty about their rights and control of the trust. The trust deed:

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    • Item icon Hybrid trust deed
  • Folder icon F. Charitable trusts
    • Item icon Charitable trusts
      In addition to Commonwealth and state legislation governing trusts in each jurisdiction, charitable trusts are subject to the following legislation:

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    • Item icon Taxation of charitable trusts
      Charities in Australia generally are established as charitable trusts. All charities registered with the Australian Charities and Not-for-profits Commission can apply to the ATO for an exemption from paying income tax.

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    • Item icon Charitable trust deed
    • Item icon Registration with Australian Charities and Not-for-profits Commission
      To register with the Australian Charities and Not-for-profits Commission (ACNC), a trust must support a charitable purpose and meet the registration requirements. More information is available on the website. Once registered, charitable trusts have ongoing obligations under the Australian Charities ...

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    • Item icon Applying for charity registration
  • Folder icon G. Special disability trusts
    • Item icon Special disability trusts
      A special disability trust can be established to provide for the long-term care and accommodation needs of a family member with a severe disability. This type of trust can be set up inter vivos or as a testamentary trust in a will. Whether established by deed or a will, the trust instrument must ...

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    • Item icon Eligibility requirements for a beneficiary
      The sole beneficiary of a special disability trust must be a person with a severe disability. Therefore, the first consideration in setting up a special disability trust is whether the proposed beneficiary qualifies. Severe disability is defined in s 1209M of the Act.

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    • Item icon Establishing a special disability trust
      A special disability trust requires:

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    • Item icon Taxation of special disability trusts
      A special disability trust’s income is taxed at the principal beneficiary’s marginal tax rate. The beneficiary is deemed to be presently entitled to all the trust income. Whether the trust is required to submit a tax return in any given year depends on the type and amount of income the trust has ...

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    • Item icon Special disability trust deed inter vivos
    • Item icon Special disability trust deed by will
    • Item icon Deed of variation for special disability trust
    • Item icon Audit requirements
      Special disability trusts are reviewed annually. Section 1209S of the Social Security Act 1991 requires written financial statements, prepared by an approved person, to be provided to the Department of Human Services or Department of Veterans’ Affairs, as applicable, on or before ...

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  • Folder icon H. Finalising the matter
    • Item icon Letter to client finalising the matter
    • Folder icon Example invoices incorporating notification of rights
      • Item icon Example invoice incorporating notification of client's rights - NSW
      • Item icon Example invoice incorporating notification of client's rights - VIC
      • Item icon Example invoice incorporating notification of client's rights - QLD
      • Item icon Example invoice incorporating notification of client's rights - SA
      • Item icon Example invoice incorporating notification of client's rights - TAS
      • Item icon Example invoice incorporating notification of client's rights - ACT
      • Item icon Example invoice incorporating notification of client's rights - NT
      • Item icon Example invoice incorporating notification of client's rights - WA
    • Item icon Invoice recital - Trusts
    • Item icon Closing the file
    • Item icon File closing checklist
  • Item icon Comments and suggestions for By Lawyers

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