4 MAIN REASONS TO UPGRADE TO A FAMILY PROTECTION TRUST

Here are the 4 main reasons to upgrade your trust deed to a Family Protection Trust

1. Establish a Line of Appointors

The Appointor is the key person in the governance of your Trust and they are usually named in your Deed as something like the Primary Beneficiary or Principal (the terms can change from deed to deed).

They are the person that can change the trustee of the trust and also the rules the trust must follow.

Without a line of succession (we recommend this be at least 2 generations long), problems can arise if the appointor dies, is incapacitated, or becomes bankrupt. This leaves your trust is left without an appointor.

The flow-on impact of this is that if something were also to happen to the Trustee, that the Trust can become invalid with tax and estate consequences. As the Trustees and Appointors are usually the same person this can be problematic!

The new mechanics available to us in Trust Deeds include the ability to build into it a succession of Appointors, to prevent this from happening.

Updating your deed will allow you to formalise this line of succession by naming the people you would like in order or succession.

2. Lock your Trust Assets to your Family “Bloodline”

The additional benefits of upgrading your Trust is that ability to lock the assets and wealth in your Trust to your bloodline.

These trust deed updates also provide that security, ensuring your children's de facto cannot access assets in your trust in the event of separation.

3. Changes to Compliance Requirements

The trust deed upgrade also makes sure that the recent accounting standards changes - which require "general purpose financial statements" to be prepared - do not apply.

They also specifically exclude foreign person beneficiaries to avoid the 2% land tax surcharge and stamp duty surcharges that each of the States now have in place if you hold property inside of the Trust, and the stamp duty surcharges if you acquire more property.

4. Case Law Precedent

Decisions made by the Courts impact the decisions of future legal suits - as the law recognizes the earlier decisions as Precedent.

This means that future decisions by Courts will more than likely follow the early decisions.

There has been a very important decisions by the Courts recently that we need to safe-guard against. In Owies case, children who were named beneficiaries decided they should have received distributions from the Trust and that their needs had not been considered.

This resulted in the Trustee's were removed by the Court and a new Trustee appointed.

As the Trustee is the person who makes all decisions in relation to the running of the Trust - including who receives the money, this is a serious issue.

Where you have more than one named beneficiary in your deed – we recommend bringing this back to one named beneficiary to reduce your risk in this area.

NEXT STEPS

We make the process to update your Trust Deed simple.

We have built a relationship with a legal firm in Melbourne who specialise in legal documentation designed around Wealth Protection and Estate Planning - and are innovating in this space.

We will liaise with them to prepare a Deed of Variation for your Trust that can then be signed off by the Appointor and Trustees of the Trust.

Easy!

If you would like us to help you with this, please call and ask for Deborah who will get this underway for you as a priority.