Tax effective trust deeds - part 1

1. INTRODUCTION

I have been asked to discuss some specific issues which are relevant to modern trust deeds.

There are numerous different categories of trust that are recognised by the law but the most common structure utilised for investment and business purposes in Australia is what is generally described as a 'discretionary trust', although that expression is not defined in legislation or case law.

Private unit trusts are also reasonably common but, for the purpose of this presentation, I will focus mainly on features that should be included in 'smart' discretionary trust deeds.

There are a very large number of trust deed templates that are in wide circulation and it is often difficult for a client or professional adviser to assess whether a particular style of deed is adequate and up to date. The main risk factor in my view is that many trust deeds are based on a precedent that was drafted many years ago and which has not been regularly updated.