Who are the Beneficiaries in the Patricia Holdings Family Trust?

The Nominated Beneficiaries in the Patricia Holdings Family Trust are the person(s) named and described in the schedule.

The General Beneficiaries are:

(a) the “Nominated Beneficiary” or “Nominated Beneficiaries”, and

(b) the “Relations of the Nominated Beneficiaries”, and

(c) “Related Corporations and Trusts”, and

(d) “Directors of Related Corporations”, and

(e) “Shareholders of Related Corporations”, and

(f) the “Legal Personal Representative” of a General Beneficiary, and

(g) “Charities and Institutions”, and

(h) any additional persons (if any) that are named, described or defined in the Schedule as

The Additional General Beneficiaries are Beneficiaries who don’t fall within any of the categories as defined by “General Beneficiaries”. These could be a neighbour or a close friend.

Our order form invites you to nominate “Additional General Beneficiaries” if you choose. Individuals or entities named as Additional General Beneficiaries are Beneficiaries of the trust but do not benefit from the lineal or lateral provisions that the Nominated Beneficiaries enjoy. I.e. the Trustee has no discretion to distribute income or capital to related individuals or entities related to the “Additional General Beneficiaries”.

A Charity can be an Additional General Beneficiary.

Can a sole person be trustee, appointor and beneficiary of a family trust?

This is generally considered bad practice.

Some arguments state that they can be, however the trustee MUST show that they have at least considered other beneficiaries (as defined in the pool of beneficiaries) other than themselves. If this is not able to be shown, then it can be argued that a trust arrangement does not actually exist. We always recommend having at least one other person be nominated trustee, appointor or beneficiary in the trust to avoid such situations. We also suggest seeking independent legal, financial or tax advice prior to placing your trust deed order with us as we cannot advise you on your own individual circumstance.

Who owns the trust assets in a Family Trust?

A trust is not a legal entity in itself and cannot own property. Instead a trust describes a relationship between various parties whereby a trustee or trustees (the legal owner) hold trust property on behalf of beneficiaries (the beneficial owner(s)). In the context of a Family trust the trustee holds the trust property on behalf of the nominated and general beneficiaries.

Should I use a corporate trustee for my Family Trust?

A corporate trustee has several advantages over an individual trustee:

Immortality

A corporate trustee, being a separate legal entity, can exist indefinitely, whereas individual trustees will eventually die, may become incapacitated, or may want out for another reason.

Legal ownership of the trust assets

Assets in a trust are held in the name of the Trustee on behalf of the trust. If individuals act as the trustee of your trust and you later want to change the trustee, you will have to change the legal owner of your trust’s assets.  Conversely, you can simply change the shareholders and directors of a corporate trustee which will not change the legal owner of the trust’s assets.

Asset protection & limited liability

Individual trustees can be personally liable for any loans taken out or liabilities that the trust may incur. If a corporate trustee is used, liability will generally be limited to the assets of the trustee company itself.

Can my Discretionary (Family) Trust be considered a business?

A trust is an arrangement between two or more parties whereby one party (the trustee) holds the assets within the trust on behalf of another party (the beneficiaries). While a trust can operate a business, the trust itself should not be considered a business. The trust deed provides rules, powers and guidelines and would need to written in such a way that allows a business to trade through a trust. Generally speaking, a company will act as the trustee of the trust and there will be nominated beneficiaries (usually the business owner and a beneficiary company). The trustee will then register a business name which will become the name the business trades under. This type of business structure is generally preferred for business owners seeking tax minimisation.

What is the difference between a family trust and a company?

These are two totally different things – a trust is an arrangement between 2 or more parties. It is a set of responsibilities that are imposed on a nominated party (the trustee) to hold assets on behalf of another party. A company is a legal entity registered with ASIC, that exists separately from its owners (its shareholders). A company’s status as a separate legal entity gives it the same rights as a natural person, meaning it can be sued, is liable for debts and it can sue another entity.

Why would I exclude Foreign Beneficiaries from my Family Trust?

Since 2015, the various State Revenue Offices (SROs) have been introducing potential surcharges on trusts that do not exclude foreign persons (or “absentees”) as beneficiaries, or, have foreign persons acting as trustee and hold property in the trust. Generally speaking, ‘foreign person’ means a person (or entity) that does not ordinarily reside in Australia and can include:

  • an individual
  • a corporation
  • a trustee of a trust
  • a beneficiary of a trust
  • a government
  • a government investor
  • a partner in a limited partnership.


Even if a foreign person has not been named as a beneficiary, due to the general pool of beneficiaries defined in the deed, a foreign person may in fact be eligible to receive distributions thus the trustees may be liable for surcharge payments even when they have not, nor do they intend to, distribute to foreign persons.

Patricia Holdings offer two versions of our Family (or Discretionary) Trust Deeds for whether you wish to allow or disallow foreign persons from benefiting from the trust. If your deed has already been prepared and does not currently exclude foreign persons, we can prepare an amendment for you irrevocably excluding foreign persons from benefiting. This amendment can be ordered here.

For an overview of the surcharges currently in place around the country, please download our fact sheet.

How long does a Family Trust Deed last?

A Trust  must vest (be wound up and its assets distributed) within 80 years of being set up (except in South Australia where the Law relating to perpetuities does not apply). The Patricia Holdings Trust deed provides for the Trust to have a maximum life of 79 years. A Trust can be wound up at any time within the 79 years.

Can a Beneficiary be added to a Family Trust?

Generally speaking, yes, however this is not advised.

The definition of Beneficiary in most Family Trust deeds is very broad so it may not ever be necessary to add a Beneficiary. It is also worth noting that if a Beneficiary that could not be contemplated under the wide definition is added, then the addition can create a resettlement which can result in Capital Gains Tax and Stamp Duty being required to be paid for a second time. We suggest you seek independent legal advice before looking to add beneficiaries to an already settled trust.

Can a Settlor be changed?

If the Trust has already been settled and the settled sum paid to the trustee, no. The sole function of a Settlor is to establish the Trust. Once established and the settled sum has been paid to the Trustee the Settlor has no further involvement with the Trust thus there is no point in changing the named Settlor.

Must the Trustee of a Family Trust have an Australian address?

The Trustee must have an Australian address as they have Governance responsibility for the Trust and therefore need to be accessible to the Legal Jurisdiction under which they operate. The state or territory of Jurisdiction can be nominated, but should the Trust be subject to legal proceedings, this is only one of the factors that will be taken into account when determining the appropriate Jurisdiction for the action.

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