Common Problems with Trust Deeds
17-May-2018
Increasingly, we are having to fix problems with trust deeds that come across our desk, due to a range of issues. Whilst these problems may not immediately jump out at you, they rear their heads when changes are made, and especially if the Deed needs to be registered with the Titles Office.
No Discharge when Changing from Two Trustees to One
It is not uncommon for changes to be made to a trust to go from two trustees to one trustee.
This limitation applies far beyond just your standard discretionary trusts.
When the client originally contacted the provider, they said “this comes up from time to time but we can fix it for $550”… they wanted to charge
the client $550 to write a letter (not even to fix the actual Deed) caused by a Deed that they produced which did not have the necessary clause!
We were able to fix the problem by writing to the Titles Office and completed an update to the SMSF Deed (for cheaper than the producer was willing to
offer just for a letter).
Rest assured that all the Discretionary Trust Deeds and SMSF Trust Deeds we produce contain the necessary discharge clause.
No Stamping
It is important to consider stamp (/transfer) duty in a wide number of circumstances, including changes to a trust. A common one that you will encounter is a change of trustee.
When we are asked to change a trustee of a trust, we get a copy of the trust deed and all subsequent amending deeds. It is surprising just how often we
see earlier deeds changing the trustee without any stamping notation.
A change of trustee is a dutiable event in Queensland. However, there is an exemption that applies if stamp duty has been paid on all dutiable trust acquisitions
or trust surrenders to date and the transaction does not change the rights or interests of a beneficiary of the trust or terminate the trust.
To claim the exemption, certain documents (OSR Form 2.2 and statutory declaration) need to be prepared and signed and then a self-assessor (e.g. registered
law firm) or the Office of State Revenue need to attend to the stamping.
Where clients or accountants order the change of trustee deeds online from a mass provider, the provider generally does not follow through the whole process
and attend to stamping of the Deed (as we do).
Accordingly, the failure to stamp Trust amendments appropriately can cause major problems later, and costs the client additional money, if picked up by the Titles Office and asset holders. Our approach is to do it all at the same time.
Conclusion
For more information please contact us.