Questions - Existing or Old Trust Deeds Key Questions - What to look out for in "older Trust Deeds" and in the simple cheap Trust Deeds that can be downloaded on the Internet...............
Checklist – Tax/Legal & Estate Planning Issues to Look for in a Family Trust Deed
1. Has Your Trust Deed specified how long the Trust is to last ? It is 80 years maximum in most Australian States/Territories except South Australia wher the so called "rule against perpetuities" has been abolished.
-Could invalidate or void the whole Trust if not done properly..........= Massive tax & legal problems & expense ?!
2. If there are no default or back up beneficiaries ; the property of the trust may accessible to ordinary creditors in the event of a bankruptcy...................
3.Do the Trust rules or provisions in the Trust deed allow Trust property or the entitlements to benefits from the Trust to pass in the event of the death of a main beneficiary via a will ? If not do other provisons deal effectively with the situation where the main beneficiarie(s) die ?
4. Is there sufficient power to discriminate beween accounting income and taxable income , to allow "streaming" and to adequately discrimate between capital and income so as to comply with all current tax legislation ?
5. Are Trustees automtically removed if they become bankrupt or suffer some form of incapacity ?
6. What happens when the Appointor of new Trustee(s) dies or is incapacitated ? or he becomes bankrupt etc ?
7. Is there power to amend the Trust Deed rules or provisions to cope with changes in taxes at State and Federal level or changed circumstances generally ?
8.Do the Trust Rules/Provisions set out who benefits from
the trust property when the main beneficiaries die ?
If not , the Trust Property/Money may not be shared out fairly leading to disputes and costly court actions !