Trusts are not well understood by most people let alone business owners, but they are a very common and integral part of commercial life.
It is critical to obtain legal advice about trusts in addition to receiving advice from your accountant and financial planner.
Put simply, a trust is a business structure through which a trustee of a trust is able to control the accumulation and distribution of property and income.
Types of trusts
There are various forms of trusts (some of them meaning the same thing) including:
- discretionary trusts
- family trusts
- investment or property trusts
- unit trusts
- hybrid trusts
- testamentary trusts
- charitable trusts
- bare trusts
- superannuation trusts
- custodial trusts
Why trusts are useful
Trusts can be useful to:
- save tax
- split income
- prevent or minimise risk of attack from third parties (eg creditors)
- control assets and income
Without proper advice and representation, trusts disputes can arise and have the potential to be a costly and stressful experience, particularly in the family context. Trust disputes can involve conflict between:
- trustees and beneficiaries
- trustees and/or beneficiaries and third parties.
Issues that can arise with trusts
There are many complex issues that can arise in relation to trusts, including:
- whether a trust has, in fact, been created
- management disputes, including the appointment, removal, or remuneration of the trustee or directors of a trustee company
- income division, including entitlement or access to income, timing of entitlements, the splitting of income between family members and business operators
- asset ownership and distributions
- taxation problems
The whole notion of a “trust” and the relationship between trustees and beneficiaries can give rise to breaches of trust and disputes between trustees, and between trustees and beneficiaries, and between beneficiaries or a combination of them.
Trusts can arise by operation of law even though no express arrangement exists, for example in the case of:
- resulting trusts
- constructive trusts
How we can help
Because trusts can often given rise to complex and intricate legal arguments, it is important that you seek independent legal advice and if necessary representation, as the failure to do so may become very costly for one or more or all of the parties involved in the dispute.
If you have a trust dispute, whether you are the trustee or the beneficiary, or want to make sure that such disputes can be avoided, please do not hesitate to contact us on 8237 0559.