A trust is a mechanism that is widely used for investment, business planning and the management of the financial affairs of families. A trust can also be effective in structuring family assets or businesses for protection against liability as well as to share income for tax benefits.

What must a trust contain?

There are several trust structures, each being specific for a given purposes. However, each trust must contain the following:

1. A Trustee – the legal entity (person or company) that holds the trust property for the benefit of the beneficiaries. Under trust law, trustees are:
   
   -Personally liable for the debts of the trusts they administer; and
   
   -Entitled to be indemnified out of the trust property for liabilities incurred in the proper exercise of the trustee’s powers.
   

Under tax law, the trustee is responsible for managing the trust’s tax affairs.

2. A Beneficiary or Beneficiaries – the person/s that are the ultimate owner/s of the trust property and for whom the trust property is held.

3. Trust Property – for example real estate, shares, money, intellectual property.

When are trusts used?

A family trust is a discretionary trust that is generally established by a family member for the benefit of members of the family group. A family trust can be made:

• where there is a family business;
  
  
• to hold family assets;
  
  
• to pass family assets to future generations;
  
  
• for tax purposes;
  
  
• to protect assets; and
  
  
• to avoid challenges to a family member’s Will.

How are family trusts established?

A family trust is established by a Trust Deed. This deed will contain specifics of the trust, its purpose, and its terms and conditions under which the family trust will be maintained.

Once the trust deed is prepared, the family trust property must be settled by a ‘settlor’ signing the trust deed. The settlor’s function is to give the assets to the trustee to hold for the benefit of the trust’s beneficiaries on the terms and conditions set out in the trust deed. This process is a formality after which the settlor has no further involvement in the trust. 

After the trust deed is signed by the settlor, the trustee must hold a meeting agreeing to their appointment as trustee of the trust and to be bound by the terms and conditions of the trust deed.

Once the trust deed is signed, it is then submitted to the relevant State’s revenue office for payment of applicable stamp duty and stamping. Although, stamping is not required in certain States in Australia, it is required in States such as New South Wales and Victoria. Stamping will need to be done within the relevant time limits and penalties apply for late stamping.

The above are some basic steps involved in setting up and registering a family trust.

In following articles, we will discuss concessions available to family trusts and how Family Trust Elections (FTEs) are made.

By Oguzhan Sheriff.
Director at RSG Lawyers and Associates.

Email: oguzhan@rsglaw.com.au
Ph: 03 9350 4440

Footnotes available on request.

It is best to be represented by a legal practitioner at the Administrative Appeals Tribunal (AAT). However, it is understandable that not every review applicant will be able to afford representation.

In my years of experience, here are some tips for self represented applicants who may soon appear at the AAT:

1) Provide documents on time.

The AAT will request you provide certain documents usually 28 days prior to the hearing. Some of the documents and or information that the AAT may request include:

a) evidence that you intend on relying on in support of your application;

b) names of any witnesses you wish to call to give oral evidence or to cross examine in form of a hearing certificate; and

c) whether you require an interpreter which is also specified in a hearing certificate.

If you provide such documents late or do not provide them at all, it will result in the Member or President not having enough time to consider the main issues in your application prior to the hearing, crucial evidence being left out in your hearing or a chance that an interpreter is not organised resulting in a delay in the hearing.

Note: A Member, President or Deputy President are the decision makers at the AAT who will consider and make a determination on your application. The President and Deputy Presidents can exercise powers in any of the AAT’s divisions. Senior Members and Members may only exercise powers in the division or divisions to which they have been assigned.

2) Answer the question.

The Member will ask you specific questions relating to your application. While it is understandable that you may want to say many things related to your case, you need to answer the question rather than to talk about issues that the Member has not raised.

3) Speaking when you have not been requested to speak.

As a matter of etiquette, do not speak over the Member or to other people in the room that may be accompanying you. Other people cannot answer questions on your behalf and cannot speak unless they have been asked to by the Member.

4) Bring two copies of evidence.

There have been occasions where the Member has not received some of the documents that have been filed with the AAT. To avoid such a scenario, it is always best to bring a copy of the documents you wish to rely on so that you may tender such documents to the Member if he or she does not seem to have all of the evidence that you have filed with AAT.

5) Be well prepared and transparent.

At the start of the hearing, you will be required to take an oath or an affirmation to tell the truth to the AAT. It is imperative that you are well prepared prior to your hearing and also important that you are transparent in your answers to the AAT. Should the Member infer from your answers that you are not being truthful or transparent, it may indicate to the AAT that your claims are not well founded or lack credibility.

Conclusion

Ultimately, preparation is everything when appearing at the AAT. If you are unprepared and have not filed all the evidence you wish to rely upon, it is likely that you will not give yourself the best chance for success in your merits review application.

By Farhan Rehman

Farhan is a director at RSG Lawyers and Associates. He appears at the AAT in the general and migration/refugee divisions.

Contact
Ph: 03 9350 4440
Email: farhan@rsglaw.com.au
http://www.rsglaw.com.au