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The Settlor is the person who "settles" or creates a trust, by providing the settled sum to the Trustee. The settled sum is the initial trust property.
When selecting the settlor, the best practice is to have an unrelated person act in that role e.g. a close, though unrelated, family friend.
We do not accept relatives of the beneficiaries or trustees as Settlors.
Yes we can provide Hybrid Trusts.
These types of trusts involve both fixed elements like a unit trust (and may even issue units), but also give the trustee an element of discretion in relation to the distribution of income and/or capital.
Although these types of trusts have their uses, they are often quite specific to the needs of the relevant individuals setting them up.
We can prepare a deed of vesting and supporting documents to wind up a trust. These documents will be prepared by our in-house legal team in accordance with the terms of the deed, so we ask that you upload an executed copy of the original deed to the online order form.
If the trustee is a company and it is also going to be wound up, this should not happen until after the trust has been vested, as the trustee will be a party to the Deed of Vesting.
To order a deed of vesting online, simply log into your account.
If we have recently established a trust for you, and you discover that you want something changed in the deed, we can generally make the change and update the documents for you in some circumstances. We can only do this if:
· The trust deed has not been signed.
· If already signed, the trust deed must not have been provided to third parties.
· The trust has not opened a bank account.
· The trust has not entered into any contract or arrangements with third parties.
· The trust deed has not been stamped.
A fee may apply, and changes must be made within 7 days after the initial completion of your order.
Any changes in other circumstances will require a deed of amendment. Please contact us at info@docscentre.com.au if this is the case and our team will send you the appropriate order form.
As a registered Duties Online organisation, we can process the duty in Victorian and New South Wales for deeds that we have established. (Please note that for NSW stamping, we need the executed deeds in hard copy to process the duty and unfortunately cannot accept a scanned copy.) For Victorian stamping, we encourage you to email us a scanned copy.
Read more about our optional stamping service for Discretionary, Unit and Child Mainentance Trust establishments.
We can prepare a trust deed amendment to make the following changes to an existing trust:
Our legal team will review your existing deed and prepare the amendment as a supplementary deed to be kept with the original trust deed. The deed and supporting documents will be prepared in accordance with the rules as set out in the original trust deed.
Where more than one of these changes is to be made, we provide bundled pricing. The price is $350 for the first amendment, $220 for each additional change requested.
In some rare cases an initial deed of amendment may be required to add the power to make the amendment. In these cases a further $350 applies to make that amendment to the deed to enable the change you want to make.
We are able to stamp most deeds that are a little late, however if they are extremely late then we may not be able to assess online.
There may be interest to pay based on the time between signing the trust deeds and them being assessed for duty.
It's up the the relevant state revenue office to determine whether there will be penalties or interest to be paid for late assessments, and we are unable to calculate this until we attempt to process the duty online. As a guide, the VIC and NSW SRO will often waive penalty interest under $20 for deeds that are a few months late, but not if they are years late.
To avoid late interest fees from the SRO trust deeds should be stamped in Victoria within 30 days of signing and within 3 months of signing in New South Wales.
See more information about our trust stamping service.
It is generally preferable to have separate trustees for the following reasons:
Yes. When you set up a Victorian or NSW trust with us, you can also order our Stamping Service. Once the trust deeds are signed, we can arrange for stamping in Victoria or NSW once they’re returned to us.
Our stamping service is only available to accounting and financial professionals. If you are not a professional adviser, please contact your local revenue office for assistance.
We believe that it should be fine to change the name of the corporate trustee, without any adverse consequences for the trust.
As the company itself will be remaining as trustee of the trust and only its name will be changing, we don’t think it should be necessary to prepare and documents for this change. When the company receives its certificate of name change from ASIC, a copy of the certificate should be kept with the trust deed to show that the trustee’s name has changed.
Note that some banks may insist on a deed on confirmation or similar to confirm that although the company name has changed, the trustee of the trust remains the same. We think this shouldn‘t be necessary, but can assist in this regard if so requested (our fee to prepare a deed of confirmation would be $350).
Resettling a trust simply means that a new trust has been created out of an existing trust. This may result in the termination of the original trust or result in the original trust continuing alongside a new trust.
The creation of a trust in these circumstances can have significant capital gains tax and duty implications. Where a trust is resettled, and a new trust is created:
The main thing to be careful about is the restrictions on investments that SMSFs can make.
In particular there are the "in-house asset rules", which generally prohibit a super fund from investing more than 5% of the fund's assets in a related party. Normally the unit trust will be a related party, and the acquisition of the units will be an investment - so you will need to be careful about this (especially if the SMSF already has other in-house asset investments!).
For example, if the SMSF has $100,000, the maximum it can generally invest in related parties (in total) is $5000.
There are exceptions to this, but it's best to obtain specialist advice if you would like an SMSF to invest in a unit trust.
Income from a unit trust may also be "non-arm's length income" in the hands of the fund and taxed at penalty rates.
In addition, to be safe, SMSFs should only really invest in fixed unit trusts, so that they have a fixed interest in the trust's assets (and the trustee cannot "siphon" funds out of the trust by, for example, issuing units to someone else for less than they are worth).
For example:
Note: If we receive an order setting up a unit trust with an SMSF subscriber, unless we receive explicit instructions to the contrary, we will assume that the investment in the unit trust is consistent with the SMSF's investment strategy.
Note also that we provide a separate (non-geared) unit trust deed that is specifically tailored to having an SMSF as a unitholder. You can order this Non-Geared Unit Trust online. Of course, this unit trust deed by itself does not guarantee compliance by the SMSF unitholder with the superannuation legislation.
Where a trust incurs tax losses, certain rules need to be satisfied in order to claim those losses. The rules for claiming the losses depend on whether the trust is a 'fixed trust' or a 'non-fixed trust'.
A trust is a fixed trust if persons (i.e., individuals, companies, trusts etc.) have fixed entitlements to all of the income and capital of the trust, but this does not necessarily mean that all unit trusts will be fixed trusts.
For a unit trust to be a fixed trust, the trust deed must specify that units can only be redeemed or issued for a price determined on the basis of the net asset value, according to Australian accounting principles, of the unit trust at the time of redemption or issue. Our deed contains clauses to this effect.
If the trust deed allows for other methods of valuing new units or the redemption of units then the trust will be a 'non-fixed trust'.
Generally, a fixed trust can carry forward any losses it makes, to be offset against future income, if it satisfies the "50% stake test". Basically, this test requires that the same individuals must have had, at all relevant times, more than a 50% stake in the fixed trust (i.e., more than a 50% stake in the income and capital of the trust between them). A fixed trust must also satisfy the 'income injection test'.
For a non-fixed trust to be able to carry forward its losses, it may not only need to satisfy the 50% stake test, but also the 'pattern of distributions test', the 'control test' and the 'income injection test'. Although this is more difficult, it is important to note that a non-fixed trust can still carry forward losses provided it satisfies the relevant tests.
Unfortunately, once you have ordered a deed from us, we do not make any significant structural changes to the deed unless the deed has not been executed.
Our concern with making major structural amendments to a trust deed is that this may cause a resettlement of the trust, which can have adverse tax and stamp duty implications (although it is by no means certain that a change such as this will resettle a trust).
We do not get involved in anything that may resettle a trust. As alluded to above, we do not really make any changes to deeds once the trusts are set up unless it hasn't really done anything (in which case we can provide replacement deeds for a fee). You may wish to contact a solicitor who can provide advice in relation to this, who could also tailor any amendment to the deed to your circumstances.
Unfortunately, the fixed unit trust deed and the ordinary unit trust deed are entirely different deeds, with different provisions, and to make a change to the deed now may constitute a resettlement (which can have stamp duty and capital gains tax (CGT) implications). Whether this change would resettle the trusts (it would mainly involve adjusting how units can be valued) is unclear.
Nevertheless, in some cases (i.e., where it is clear that the wrong deed was used by mistake when the trust was established), it may be possible for a deed of rectification to be prepared to reflect the original intention of the parties when the trust was established and to correct the mistake. Whether a deed of rectification can be prepared needs to be considered on a case by case basis, having regard to the risk of resettlement.
Yes, we can prepare documents for simple changes in unitholders and/or unitholding in a unit trust for the transfer, redemption or issue of new units.
If you have a {{supplier_name}} deed, the procedure for making changes is also set out in clauses 6 and 7 of our current deed) and we provide a template transfer notice, unit certificate, application for new units and instrument of transfer of units at the back of each unit trust deed we prepare.
Land tax legislation imposes land tax on property held by a trust on the basis that the trust is either a fixed trust or a special trust. A fixed trust may claim a generous land tax free threshold whereas a special trust cannot. A fixed trust requires the beneficiaries to have fixed entitlements to all trust income and capital. As such a fixed trust will usually be a unit trust (which is the case with our fixed trust).
A family unit trust may also be classified as a fixed trust when its land holdings in NSW have a taxable value of $1 million or less and 95 per cent or more of the units are owned by the same family group.
Note that where any of the unit holders are discretionary trusts, the land tax free threshold may be lost in whole or in part.
So does this mean your 'fixed unit trust' is not a fixed trust for NSW land tax purposes?
Although we do not advise on State taxes (or any taxes), it is quite likely that our standard fixed unit trusts are "special trusts" for NSW land tax purposes under the Office of State Revenue's new interpretation. Our standard fixed unit trust is a fixed trust for income tax purposes, not NSW land tax.
However, we do now also provide a separate trust deed that would be a fixed trust for NSW land tax purposes (as confirmed by the NSW OSR), as well as for income tax purposes. You can order this type of trust here.
Yes, we can prepare documents for simple changes in unitholders and/or unitholding in a unit trust for the transfer, redemption or issue of new units.
For Constitute unit trusts the procedure for making changes is also set out in the deed (refer to clauses 6 and 7 of our current deed) and we provide a template transfer notice, unit certificate, application for new units and instrument of transfer of units at the back of each unit trust deed we prepare.
Most unit trust deeds (like ours) do not have a settlor, although some do. By way of contrast, a discretionary trust deed must have a settlor.
This is largely to do with the payment of the initial amount that is required to establish a trust. For a unit trust, this amount is generally paid by the initial unitholders, in return for the units that are issued to them. The initial unitholders therefore in a sense fulfil the “settlor” role for unit trusts.
A discretionary trust has beneficiaries, rather than unitholders, and so it is necessary for a settlor to pay a nominal amount to establish a discretionary trust.
Also, discretionary trusts, which have been around for much longer than unit trusts, have traditionally been “settled” by a person (the settlor) who wishes to establish the trust.
Changing the trustee normally requires a deed of variation. To do this, we need to see the existing trust deed, establish how a variation of the deed can be accomplished, and then, usually, prepare the deed of variation, often to be signed by the trustee (usually the unitholders also need to consent in writing - we provide this, too). The deed of variation needs to be prepared on the basis of the client's deed - we cannot really use a "pro-forma" deed.
We provide our deed of variation service for $350. We do not issue a new deed - you will basically attach the deed of variation that we issue to your existing trust deed.
This is up to you!
We have flexible options in our online forms for you to choose from; the deed can either give the chair a casting vote to break deadlocks, or not give the chair a casting vote, which means that in the event of a deadlock that cannot be broken, the unitholders can request that the matter be referred for decision by arbitration. (The relevant clause in our trust deed is 16.1)
Giving the chairperson a casting vote allows for deadlocks to be resolved relatively easily, but also gives the chairperson the power to sway the vote on matters should there be an equal number of unitholders both for and against a particular issue.
Therefore, if you elect not to give the chairperson a casting vote, this avoids one person possibly wielding a disproportionate amount of power at meetings, but also means that resolving deadlocks may not be so easy (and could potentially be protracted and quite costly).
Unfortunately, no. All our unit trust deeds in effect require all units to be fully paid when the units are issued to the unitholders. This includes the unit trust, fixed unit trust, fixed unit trust for NSW land tax and non-geared unit trust.
No. It is the case in all states and territories of Australia that only a unit trust with foreign unitholders would (possibly) be regarded as a foreign trust. A unit trust that only has Australian residents as unitholders would not be regarded as a foreign trust.
A unit trust where all the unitholders are Australian residents would not be regarded as a foreign trust, although this could change if a foreign person subsequently became a unitholder.
