I am always on the look out for interesting tips for clients and while this may not necessarily SMSF related, many of my readers are also involved in family or discretionary trusts.  I came across a blog from Dr. Brett Davies at Legal Consolidated over the weekend and found it useful for my own circumstances so, with his permission, I am “paying it forward”.

In his blog Son lost the farm to his sisters – Family Trust guilty he explained how the best intentions of a person in setting out their wishes and division of their assets on death can be overturned by not understanding how control of assets is managed and passed on properly to the intended beneficiaries when dealing with companies and trusts. I’ll leave you to read the blog yourself but I will point out the key 11 issues Brett and his team identified from reviewing thousands of trust deeds over the last few years. Take the opportunity to review your trust deed and look for the ability:

1. For the Commonwealth Bank and other lenders:
   · indemnify out of trust assets
   · allowing conflict of interest under both statute and common law
   · increasing the class of investments including exotics, warrants, derivatives and options
2. Allowing greater powers and methods of amending the trust deed
3. Improve Asset Preservation, strengthen bankruptcy protection and ensure no Partnership relationships
4. Changing trustee with minimum stamp duty, especially for land rich trusts
5. Managing Division 7A issues and avoiding automatic breaches
6. Change the vesting date pursuant to the new taxation cases
7. Change jurisdictions to allow forum shopping and ease of litigation
8. Change beneficiaries and classes of beneficiaries (but subject to CGT rules)
9. Allowing changes to the trust to be verbal and via minute or any other mechanism
10. to adapt the general ‘Streaming provisions’ based on ATO’s latest rulings:
    · franking credits
    · streaming different classes of income and capital for minors for deceased estates, life insurance and super funds
    · attribution relating to distributing capital gain to beneficiaries
    · Bamford Decision including defining ‘income’
    · Loss Recoupment
11. to decide if the majority of Appointors should be able to take all the proceeds of the trust over the minority or not.

Maybe take this list to your advice team (solicitor, accountant and financial planner) and ask them to review your trust deed and estate planning to ensure you have a trust that can confidently meet your needs and manage your affairs for you while alive and for your ultimate beneficiaries. If you are not sure your legal advisers are up to it then ask us to put you in touch with Brett and his team at Legal Consolidated or to liaise with your current solicitor.

Looking for an adviser that will keep you up to date and provide guidance and tips like in this blog? Then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options. Do it! make 2016 the year to get organised or it will be 2026 before you know it.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net