Dying Dad’s Family Trust had a farm (worth $2m) and two apartments (worth $2m each). Dad said ‘you girls get a $2m apartment each, the boy gets the $2m farm – it is all fair’.
The girls said nothing.
Upon Dad’s death all 3 of his children became the co-Appointors.
The son went back to the farm. The girls went to a lawyer. The lawyer said that the Family Trust allowed a majority of Appointors to control the trust. The majority could override the minority. The girls then distributed the farm and apartments to themselves ONLY. The girls sold the farm. Sadly, they had to get the police to get their brother removed from their farm.
The boy rang up the website that prepared the Family Trust Deed to seek advice. The website people said that they were not lawyers and couldn’t give legal advice. They said that their website was not part of a law firm – which is a bit sad since it supposedly sells legal documents.
You need to check your Family Trust to make sure that all the Appointors must act unanimously. If you are unsure then telephone us, we are a law firm, we give you legal advice as you build your document online.
You can build your Family Trust General Update here for $220:
After reviewing 1,000s of Family Trust Deeds and attending many ATO hostile audits, these are the 11 most common Family Trust Deed faults that can still be rectified:
1. For the Commonwealth Bank and other lenders:
· indemnify out of trust assets
· allowing conflict of interest under both statute and common law
· increasing the class of investments including exotics, warrants, derivatives and options
2. Greater powers and methods of amending the trust deed
3. Asset Preservation, strengthen bankruptcy protection and ensure no Partnership relationships
4. change trustee with minimum stamp duty, especially for land rich trusts
5. Division 7A avoiding automatic breaches
6. change the vesting date pursuant to the new taxation cases
7. change jurisdictions to allow forum shopping and ease of litigation
8. change beneficiaries and classes of beneficiaries (but subject to CGT rules)
9. allowing changes to the trust to be verbal and via minute or any other mechanism
10. The general ‘Streaming provisions’ based on ATO’s latest rulings:
· franking credits
· streaming different classes of income and capital for minors for deceased estates, life insurance and super funds
· attribution relating to distributing capital gain to beneficiaries
· Bamford Decision including defining ‘income’
· Loss Recoupment
11. The majority of Appointors being able to take all the proceeds of the trust over the minority
Our law firm’s Family Trust Deed General Update rectifies all of these issues. All without triggering a resettlement. You can see a Sample here.