Trust Lawyers Brisbane

A trust is a way to control the distribution of property and assets, including money. A trust can ensure that assets are distributed under specific circumstances to specific beneficiaries.

Due to the tax and inheritance benefits associated with trust structures, they are frequently used in Australia.

Fundamentally, a trust is a fiduciary relationship between three separate parties:

The settlor

The settlor is the person who creates the trust and puts their property into it. The settlor allows the trustee to hold a legal or equitable interest in property, not for the benefit of the trustee but the beneficiary.

The trustee

The trustee of a trust is the person who holds and controls the property inside the trust for the beneficiary. The trustee must maintain the trust and they have onerous duties to abide by the rules and terms of the trust deed.

A trust deed instructs how the trust assets can be used, and the trustee is legally bound to carry out those instructions. The assets may only be used according to these instructions and for the nominated beneficiaries.

If a trustee is found to be misusing assets they may be removed and subjected to legal action.

The decision to act as a trustee should not be taken lightly.

The beneficiary

A beneficiary of a trust is a person or entity for whose benefit the property is held. The beneficiary can receive the property in many ways. For example, they can receive the property outright, as a percentage incrementally over time, or as payment for expenses over the beneficiary’s lifetime.

How the trust assets are disbursed depends on the reason(s) for the trust.

1. Fixed Trusts: In a fixed trust, each beneficiary is entitled to a fixed portion of the trust’s capital and income annually. People use them to minimize conflicts among beneficiaries due to predetermined shares.
2. Unit Trusts: Unit trusts divide the trust into units, and beneficiaries (unit-holders) receive income and capital proportionate to the units they hold. They’re often used for co-owning assets and offer tax and asset protection benefits.
3. Charitable Trusts: These trusts are registered for charitable purposes and have no nominated beneficiaries. People use them for tax concessions, including income tax exemptions and deductions, as well as for garnering public donations.
4. Discretionary Family Trusts: Trustees have control over asset and income distribution, without fixed beneficiary entitlements. They are used for asset protection, especially in business situations, as assets are owned by the trustee, not beneficiaries.
5. Special Disability Trusts: Set up by family members to provide for a disabled person’s ongoing needs. These trusts don’t affect the person’s entitlement to disability support pensions.
6. Testamentary Trusts: Created by a will to control asset distribution after the settlor’s death, commonly used in estate planning for flexibility and multiple trust options.
7. Child Maintenance Trusts: Established due to family breakdown or when parents are not living together with a financial maintenance order in place. They protect property from creditors and reduce income tax for parents.
8. Bare Trusts: The trustee simply holds property for the beneficiary without any other duties. They are used for holding real estate discreetly.
9. Hybrid Trusts: Combining features of different trusts, often a mix of unit and discretionary trusts. They provide flexibility and are suitable for unrelated individuals co-owning investments or businesses.
10. Superannuation Trusts: These trusts offer retirement and death benefits to members (beneficiaries). All superannuation funds in Australia operate as trusts. They provide tax advantages and flexibility in investment decisions for retirement planning.

Each type of trust serves specific purposes, from asset protection and tax advantages to facilitating asset distribution and supporting charitable causes. Depending on your situation, one of these trust structures may be more suitable for your needs. If you have any specific questions or need assistance with setting up a trust in Queensland, please feel free to ask.

To be eligible as a trustee, a person must be aged at least 18 years, not have a legal disability and be able to own property. The trustee can be an individual or a company.

Due to the complicated nature of trusts and the duties of a trustee, the person taking on the role must be aware of their responsibilities.

The beneficiary of a trust can be an individual or a company. There are no limits on who can be a beneficiary. Minors, people who are affected by disabilities and even unborn children can be beneficiaries.

In most instances yes, a trust can be disputed. When a trust is disputed it means that the validity or authority of the trust is being challenged.

Common reasons for trust disputes involve management of the trust, trustee actions, and division of trust property. Disputes may be brought by beneficiaries or other trustees.

How a trust dispute is managed depends on the type of trust and the reason for the dispute. It is important to seek legal advice early, to help minimise the harm and damage that can be caused. Call Gibbs Wright Litigation Lawyers for a confidential discussion about your options to manage your trust dispute.

There are many types of trusts, so the reason(s) for creating a trust may vary.

Essentially a trust is a form of property ownership that allows others to benefit from the distribution of income gained by the property.

Benefits of trusts include:

Providing for family members

A trust can allow a person to share their property with their chosen beneficiaries, for example, their children and grandchildren. A trust can allow the property owner to determine how the property is to be held and distributed. A trust is particularly useful if the beneficiaries are too young, or are unable to manage their finances.

Protecting assets

Another reason trusts are often created is to separate a person’s assets from their estate. When assets are in a trust, they are in the name of a trustee. This helps in situations such as when a business fails because creditors will be unable to pursue any assets that are in the trust.

Asset protection and trusts are complex, so it’s best to seek legal advice to receive the most up-to-date information.

Tax advantages

There are tax advantages to holding assets in a trust. One main advantage is that the income generated by those assets is taxed at the rate that applies to the beneficiary. This rate is often lower than the rate that applies to the original owner.

Because there are many different trust types, it’s important to discuss your options with a taxation lawyer.

Yes, a trustee can also be the beneficiary of a trust, but not the sole beneficiary unless there is more than one trustee.

Where a trustee is also a beneficiary of a trust, it is recommended that more than one trustee is appointed to avoid complications regarding the improper exercise of power.

A trust litigation lawyer can help deal with trusts of any type and in a variety of ways. Most commonly, a trust lawyer is needed if:

• The validity of a trust is questioned;
• The distribution of the trust assets is disputed; or
• The actions of a trustee are believed to be improper.

A trust lawyer can help all key players involved in a trust. They can determine whether concerns are valid and the steps that should be taken to resolve a dispute.

Common assets in a trust, called trust property, include cash, securities, business interests, real estate and life insurance policies.

Under the Limitations of Actions Act 1974 (Qld), there is a six-year time limit for a beneficiary to take action against a trustee unless the action is related to fraud or the recovery of trust property or proceeds of trust property.

In most instances, for a trustee to be removed from a trust, it needs to be proven that removal is needed:

• Because the trustee has not fulfilled their duties;
• To protect the trust assets and the beneficiaries; or
• Because the trustee is exercising their powers in a prejudicial way.

Trustee behaviour that can lead to removal includes when a trustee is:

Confused about, or misunderstands, their duties;

• Unable to be contacted; or
• Acting in a way that harms the trust.

Most trusts will have a date by which they must be formally dissolved. This process is known as vesting. The vesting date is usually included in the terms of the trust deed. In many trusts, the vesting date is 80 years from when the trust was created.

When a vesting date is reached, the trust must be dissolved. However, the trust may be dissolved before the vesting date, when:

• It is revoked. A trust may contain a provision that allows the trustee or settlor to revoke the deed.
• The beneficiaries have consented. All beneficiaries must be aged at least 18, and collectively decide to dissolve the trust, and the trustee must formally declare and record the trust as terminated.
• A court orders that the trust be dissolved.

When a trust is dissolved, all property held in the trust is distributed according to the trust deed.