All Topics / Legal & Accounting / Adding Beneficiarys to Discretionary Family Trust

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  • Profile photo of sa000584sa000584
    Join Date: 2008
    Post Count: 2


    My father has a family trust where I am a beneficiary.

    Can anyone tell me how I would add to the trust as beneficiaries my wife and my three children ?

    Thanks in advance


    Profile photo of crjcrj
    Join Date: 2004
    Post Count: 618

    Assuming from your use of the term "family trust" that this is a discretionary trust, I sugget you read the definition of beneficiaries in the trust deed.  Unless your father had some specific advice when setting up the trust to limit the beneficiaries it would be odd to limit them by excluding your children and possibly your wife as the trust would be set up to last potentially 80 years.

    If they are not beneficiaries adding them as beneficiaries could constitute a resettlement and require stamp duty be paid on the value of the trust.

    Depending on the ages of your children there are limits on the amount of unearned income they can receive before higher rates of tax apply.  If your wife and children are potential beneficiaries you could discuss with the trustee why it might be desirable to include them in distributions.  Bear in mind a discretionary trust means just that and how the benefits are distributed is at the discretion of the trustee.

    Profile photo of Tysonboss1Tysonboss1
    Join Date: 2007
    Post Count: 306

    Agreed with above comment,

    Double check the description of beneficies in the deed, you may find they already qualify.

    Profile photo of sa000584sa000584
    Join Date: 2008
    Post Count: 2

    Ok. Thanks I will check it out.   The trust is 32 years old so I am hoping my parents were thinking about my grandchildren even though i was only 1 at the time.  

    Assuming that it didn't have provision for my kids, what do i have to do to add them in ??

    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,213

    you could amend the deed, but that will cause a resettlement as crj mentioned. That means the existing trust comes to an end and a new trust is formed which is the same as the old trust selling everything to the new one = stamp duty and CGT. So you will want to avoid that at all costs.

    Looks for ways around it. eg, you are mentioned so it may also mention any trust in which you are a trustee also being a beneficiary. So you could then get the money into a new trust which you can then have your children (and everyone else practially) is a beneficiary.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide)

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