Property Lawyers

[Sonia Valentine]

Hi All,
Can anyone advice me on some contacts to good lawyers in Melbourne that are not too expensive and specialise in the field of property.

Also I have just found out that a younger trust cannot distribute to an older trust since a Trust's life is only 80 years, hence if I distribute my profits from an older trust to the newer trust then the asset will remain in it for longer. What is the best way to go about this?

Regards,
Sonia.

 

[Terry_w]

Also I have just found out that a younger trust cannot distribute to an older trust since a Trust's life is only 80 years, hence if I distribute my profits from an older trust to the newer trust then the asset will remain in it for longer. What is the best way to go about this?

This is totally incorrect.

 

[Sonia Valentine]

Hello Terry,
That is exactly what I thought as well and was advised that as long as the trust deed had some sort of wording stating that "the trust should be able to distribute to other trust/associated entities" then it should be fine.

I was given this information by an accountant and when I requested a clarification on the statement below is what he sent me.


"This is quite a complex area of law. It is a common law principle established in the 17th century in England, but it is now included in the Perpetuities and Accumulations Act 1968 (Vic). Generally, there is a ?wait and see? rule, which can stop a distribution from one trust to a ?younger? trust from being considered to be invalid. A Full Federal Court case (Nemesis Australia Pty Ltd v FCT) recently considered this and determined that the distribution was valid for tax purposes.

The above suggests the rule against perpetuities shouldn?t pose too many problems. However, it?s still a risk we need to consider when establishing a structure, because it is a point the Commissioner may choose to challenge. If a distribution is considered invalid, then the trust making the distribution will be assessed on the income that was not distributed at the highest marginal tax rate"

 

[Terry_w]

Hi Sonia

What it boils down to is whether the younger trust deed has a power to bring the vesting date forwad. If the deed allows this then there is a possibility that the distribution won't infringe the rule against perpetuity because the recipent trust may last less than the 80 years.

Your also have to read the deed carefully as some are worded so that a trust with a later vesting date cannot be a beneficiary.

 

[Paul@PFI]

The key issue is - What the jurisdiction ? What does the deed say. which law governs the trust ?

Like all legal issues, this isnt a complex area providing you get legal advice. There can be serious issues - Gina Reinhart encountered this precise issue. And a few kids who grew tired of her control

I see this same issue in deceased estates. When does a deceased estate end ?? It does NOT have to be within the shortest possible time as the tax Act suggests...It then allows a concession for three years but still allows an indefinate period. There can be very effective startegies and even estate planning and asset protection outcomes to a prolonged estate windup.

Legal advice. Should always be worth more then the hourly rate.

 

[Paul@PFI]

The above suggests the rule against perpetuities shouldn?t pose too many problems. However, it?s still a risk we need to consider when establishing a structure, because it is a point the Commissioner may choose to challenge. If a distribution is considered invalid, then the trust making the distribution will be assessed on the income that was not distributed at the highest marginal tax rate"

I have never seen a case where the Commissioner sought to impose a legal view on a trust and "challenge" common law. Even the decison on "what is trust income" was a deal brokered with a taxpayer and funded by the ATO. Tax Law cant even define what a fixed trust is. Perpetuity isnt a term in the tax act. The area which poses a concern is "absolute entitlement". If I were Gina R I would be very nervous. Tonnes of evidence on the public record all addressing an attempt to extend a vesting of a trust. Potentrially even a Part IVA issue that hasnt even been addressed. Gina sought to avoid a trigger to CGT. Vesting gives absolute entitlement and triggers a CGT event. That will be monitored by the ATO.

Distributions concern income. Absolute entitlement a different issue. Perpetuity concerns "vesting". A CGT event. I would be very surprised to find the ATO determine in an audit opinion that a perpetuity issue affects an income distribution and is governed by the terms of a deed. They cant determine if a clause which "deems" clauses into a deed or out of a deed works. I have seen a clause which basically said any issue which is a SMSF audit contravention is a subtrust and is to be held on seperate trust incl excess contributions. ATO had no response and have never acted. Imagine if I included a clause in a company constitution which deemed tax avoidance to be an inadvertent error rather than intentional... Laughable.

 

[Sonia Valentine]

Hello Terry & Paul,
Thank you for the advice, I guess I am going to see a good lawyer soon coz I just checked with the accountant and they informed me that they just buy the ready trust packs, however could change the vesting dates on the trusts so all had the same vesting date.
Not sure abt it though so will get a lawyer to do them for me.

Are there any must have clauses that I should request be included in the trust deeds.

Sonia.

 

[Lil Skater]

Hi Sonia,

I recommend Dionn at DCG Lawyers - I'm sure he'd be happy to help out. Located in Croydon.

www.dcglawyers.com.au

Good luck!

 

[Terry_w]

Hello Terry & Paul,
Thank you for the advice, I guess I am going to see a good lawyer soon coz I just checked with the accountant and they informed me that they just buy the ready trust packs, however could change the vesting dates on the trusts so all had the same vesting date.
Not sure abt it though so will get a lawyer to do them for me.

Are there any must have clauses that I should request be included in the trust deeds.

Sonia.

Plenty of clauses to consider - what clauses you need tailored will depend on your situation. Only a lawyer can draft legal documents such as deeds.

 

[Redwood]

Hello Terry & Paul,
Thank you for the advice, I guess I am going to see a good lawyer soon coz I just checked with the accountant and they informed me that they just buy the ready trust packs, however could change the vesting dates on the trusts so all had the same vesting date.
Not sure abt it though so will get a lawyer to do them for me.

Are there any must have clauses that I should request be included in the trust deeds.

Sonia.

Sonia - you mean off the shelf legal packs?

Accountants use them however their professional indemnity will not provide coverage for you as the end client. Thats why we employ our own lawyer to prepare legal deeds....

I tell every accountant that I deal with and they scratch their head about off the shelf deeds, particularly with SMSF Trust deeds and bare trust deeds, they will be in for a surprise when things go astray some time in the future. Good you picked it up early. Speak to a lawyer - its their bread and butter.

Cheers Ivan

 

[S.T]

I can recommend Jonathan Bloom of R B Legal Pty Ltd. Not too sure on expense side of things but he sorted out a very difficult family trust issue for a close friend that involved commercial property.

 

[Sonia Valentine]

Hello All,
Thank You for all your help, I will be contacting the suggested lawyers soon to see who can help me best in my situation.

Yes it is one of the off the shelf legal packs and I have had a read through it and am not satisfied that it covers some of the points I would like in the deed so definitely using a lawyer.

Ivan I did have a brief chat with Amber and told her of your recommendation, she said she would shortly send me details of trusts and its requirements. So thank you for that.

Sonia.