Update trustee of Unit Trust – change the trustee of the Unit Trust
Build a Deed of Variation to change the trustee of a Unit Trust. The update of the Unit Trust’s trustee cleans up who the trustee is for your Unit Trust. You are changing the trustee to suit your needs:
1. A Trustee may be dead or retiring: ‘leaving‘
2. A Trustee may decide to remain as a Trustee. The Trustee continues to be a Trustee: ‘remaining‘
3. A Trustee may be coming on as a new Trustee: ‘new‘
All Australian trusts must have a trustee. A Family Trust needs a trustee. A 3-Generation Testamentary Trust Will needs a trustee. Your Self-Managed Superannuation Fund needs a trustee. And, of course, your Unit Trust needs a trustee. From time to time you may need to change the trustee.
You can only change the trustee via a Deed of Variation. Your trust was formed via a Deed. It can only be updated by a Deed. A ‘minute’ or note is not sufficient to change the trustee of an Australian trust.
John wants to stop being a Trustee of the Unit Trust
Many years ago John and his business partner Peter started operating a business out of a Unit Trust. To save money they decided not to build a company to be the trustee, at that time. Instead, John agreed to be the trustee of the Unit Trust. (Tony was not prepared to go as trustee of the Unit Trust because he had assets in his own name and a home.)
John and Tony met with their adviser to discuss asset protection. Their adviser explains that there is risk in being a trustee of a unit trust. If the Unit Trust goes insolvent then the trustee is often liable for the trust debts.
John is shocked (Tony is less shocked). They immediately:
1. build a company here; and
2. build this “Change Unit Trust Trustee” to replace John as trustee for the new company (just press the blue button above to start building)
* John – leaving
* New Company Pty Ltd – new
Update the Unit Trust Trustee where:
1. the trustee retires, dies, goes bankrupt or insolvent
2. you go from a human trustee to a corporate trustee (the company becomes the new trustee)
3. you go from a corporate Trustee to a human trustee
4. you want a single trustee only
Should I have two trustees for the Unit Trust?
For asset protection, just one Trustee is better. This is because the trustee is an ‘at risk’ person. What happens if the Unit Trust goes insolvent? The trustee often goes down with the Unit Trust.
Further, for added asset protection make the new trustee of the Unit Trust a company. Build a new company here.
Any stamp duty or CGT when you change the trustee of the Unit Trust?
Does the Unit Trust own bank accounts, shares and real estate? You transfer these from the old trustee into the new trustee’s name. To transfer land you need to have completed transfer forms and have them stamped. There is generally no stamp duty (State law) or Capital Gains Tax (Federal law). This is when you transfer assets from one trustee to another. This is especially if you use our Deed. However, NSW and ACT may apply stamp duty. This on the transfer of real-estate from the old trustee to the new trustee.
‘Register’ the Deed of Variation to change Trustee?
An advantage of Unit Trusts over companies is that Unit Trusts are mostly unregulated. Companies are over-regulated.
An example of this is that you don’t lodge the Unit Trust or any Deeds of Variation of the Unit Trust (such as the one you are building) anywhere. However, keep the Unit Trust deed and all Variations of the Unit Trust somewhere safe. And make sure your accountant holds an original as well.
Have a look at the Sample document and there are many training videos and hints to help you as you build the Deed of Variation to Change the Trustee of the Unit Trust.
Telephone us as you build the Deed of Variation to Update Trustees of the Unit Trust. We help you answer the questions to change the Trustees of the Unit Trust.
Telephone us for legal advice when you update the Unit Trust’s trustee.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
39 Stirling Highway, Nedlands, WA 6009
National Australian law firm
National: 1800 141 612
Mobile: 0477 796 959