ByLawyers News and Updates

Trusts – FED

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Update to the definition of foreign person in discretionary trust deeds

The By Lawyers discretionary trust deeds and associated precedents have been updated to clarify the definition of foreign person.

The definition operates in the clauses that prohibit a foreign person from being a beneficiary, to avoid the imposition of surcharge duty and land tax.

See the discretionary trust deeds in the By Lawyers Trusts guide.

Trusts guide – All States

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The By Lawyers Trusts guide has been extensively reviewed, resulting in:

  • enhancements to the commentary for readability and ease of navigation; and
  • additional precedents and a new hyperlink on the matter plan including:
    • Initial letter to client enclosing costs agreement – Discretionary trust;
    • Initial letter to client enclosing costs agreement – Unit trust;
    • Scope of work – Trusts;
    • Deed of retirement of trustee;
    • Invoice recital – Trusts; and
    • A hyperlink to assist with applying for charity registration for a charitable trust.

Practitioners are also reminded that a new precedent Trust Deed Review Checklist was added to the Trusts guide recently in response to a request from a practitioner.

The checklist is a useful tool for lawyers when:

  • preparing a new trust deed on a client’s instructions;
  • reviewing an existing trust deed in the course of trust administration;
  • reviewing an existing trust deed when acting for the trustees in a transaction involving trust property;
  • acting for a client in a transaction where the other party is a trustee, or
  • acting for parties in a dispute over a trust, or trust property.

The new Trust Deed Review Checklist is found in folder B. Trusts generally in the By Lawyers Trusts guide.

Trusts is an extensive publication. The commentary deals with all aspects of discretionary trusts, unit trusts, charitable trusts, and special disability trusts. The array of precedents includes deeds and clauses for various iterations of all of those trusts.

At By Lawyers, we love receiving feedback from the law firms using our content, and we are always ready to add helpful new precedents that practitioners need. It’s part of our commitment to practicality and helping lawyers enjoy practice more.

If using our Trusts guide, please don’t hesitate to let us know what you think of the enhancements and additions; you can email us any time at askus@bylawyers.com.au.

Trusts – All states

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For the assistance of practitioners acting in trusts matters, a new precedent Trust Deed Review Checklist has been added to the matter plan in the By Lawyers Trusts publication. The new precedent was developed in response to a request from a practitioner.

The checklist is a useful tool for lawyers when:

  • preparing a new trust deed on a client’s instructions;
  • reviewing an existing trust deed in the course of trust administration;
  • reviewing an existing trust deed when acting for the trustees in a transaction involving trust property;
  • acting for a client in a transaction where the other party is a trustee’ or
  • acting for parties in a dispute over a trust, or trust property.

The new Trust Deed Review Checklist is found in folder B. Trusts generally in the By Lawyers Trusts guide.

At By Lawyers we love feedback from the firms using our content and are always ready to add new precedents that practitioners need. It’s part of our commitment to practicality and helping lawyers enjoy practice more.

Trusts – Foreign person – NSW

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Discretionary trusts – foreign person

Where a foreign person acquires or holds residential property, duty and land tax surcharge can apply. Foreign person surcharge duty and land tax can also apply to discretionary trusts where foreign persons are beneficiaries or potential beneficiaries.

The NSW Commissioner of State Revenue issued a ruling in March 2017 allowing exemption of discretionary trusts from surcharge duty and land tax if the trust deed was amended to exclude foreign beneficiaries within six months of the exemption being granted.

The State Revenue Legislation Further Amendment Bill 2019 is currently before the NSW Parliament. If this Bill is passed, the ability to amend a trust deed to avoid the surcharge will be restricted. Once the Bill passes, the exemption is likely to be removed. The second reading speech for the Bill states: ‘the Government considers that the end of 2019 allows sufficient time for any remaining trustees and their advisers to make necessary changes to trust deeds’.

It is therefore important for trustees to review existing discretionary trust deeds and consider whether they require amendment.

In order to avoid the application of surcharge duty and land tax, discretionary trust deeds must include a clause that prohibits the trustee from making trust distributions to, or otherwise benefiting a foreign person. The deed must also prohibit an amendment that has the effect of allowing the trustee to make distributions to, or to otherwise benefit, a foreign person.

The By Lawyers Discretionary Trust deed precedents and commentary have been amended accordingly. A note has also been added to the ‘Retainer Instructions – Trusts’ precedent, to prompt practitioners to raise this issue with clients when drafting trust deeds.

See the commentary in the By Lawyers Trusts Publication for further details.

 

New Publication – Trusts Guide – FED

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By Lawyers have a comprehensive new Trusts Guide.

The new guide contains commentary and precedents for establishing a new trust, amending an existing trust, or bringing a trust to an end through vesting or termination.

This new publication is a substantial enhancement of the previous trusts section in our Companies, Trusts, Partnerships and Superannuation guide.

The new detailed Trusts Guide deals with the various types of trust structures, including:

  • Discretionary trusts;
  • Fixed unit trusts;
  • Non-fixed unit trusts;
  • Hybrid trusts;
  • Charitable trusts; and
  • Special disability trusts.

The commentary discusses important issues affecting the use of trusts including:

  • The financial planning and asset protection merits of different trust structures;
  • The rights and obligations of beneficiaries, unit holders and trustees, including corporate trustees;
  • Taxation requirements including income tax, land tax and trust loss provisions; and
  • Common dispute resolution methods.

The new guide also contains many essential and useful precedents such as:

  • A unit trust deed that meets the requirements of a fixed trust for land tax and loss-streaming purposes;
  • A unit trust deed creating multiple classes of unit holders;
  • A discretionary trust deed;
  • A combined unit holder and shareholder agreement;
  • A hybrid trust deed;
  • A charitable trust deed;
  • A special disability trust deed; and
  • Numerous supporting documents, such as deeds of amendment.

The new Trusts Guide is available to LEAP companion product subscribers through the Guides and Precedents button in a LEAP matter, or to By Lawyers website subscribers as part of the Companies, trusts, partnerships and superannuation guide.

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