Articles and legal news from the Atkinson Vinden Team.

Doing the Deed Correctly

Wills & Probate

Atkinson Vinden recently ran a matter in the Supreme Court of NSW attempting to amend the vesting date of a Trust to protect the Beneficiaries from crippling taxation liabilities. We were able to get the orders we sought, enabling our clients to extend the vesting date significantly, thereby saving our clients potentially hundreds of thousands of dollars in capital gains liability.

The results were positive in this instance because of the way the Trust was worded. The decision highlights how vulnerable Trusts can be if not drafted correctly. When a Trust is established, the Deed establishing it will usually define an expiry date, or a vesting date, at which point all the assets of the Trust must be distributed to the beneficiaries. When this date is resolved, the costs of distributing the assets are often overlooked, and therefore when the Trust does vest, the beneficiaries may well be struck with some serious taxation liabilities, usually as a result of capital gains. This situation usually triggers a discussion amongst the beneficiaries as to whether they can delay the vesting date.

Traditionally the Court routinely granted a Trustee power to amend the Trust Deed, and therefore amend the vesting date, even where the Trust Deed did not specifically provide this power. Recent decisions of the court have altered this position – the court no longer provides this discretion except where the wording of the Trust Deed is such that on a reasonable reading, the power to extend the vesting date can already be implied.

Those establishing Trusts should be very careful to cover off this issue. Let us know if we can assist you in this complex area of law.


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