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Trust Deeds

Discussion in 'Accounting, Tax & Legal' started by DaveA, 9th Oct, 2007.

  1. DaveA

    DaveA Well-Known Member

    19th Feb, 2007
    Sydney, NSW
    Save hijacking a thread

    This is being consistantly said when talking about anything to deal with trusts.

    I know many old deeds might not have these issues, but for someone who want to set up a trust now, and buy a dead which is around (say a HDT MGS deed with no units issued) or any other normal DT deed most accountants use, are these things we need to worry about?

    Or are all these things people keep saying, do they need to put written in to amend every deed you want ot use?
  2. Nigel Ward

    Nigel Ward Team InvestEd

    10th Jun, 2005

    A quick list from a "bankability" perspective that you'd like to see covered off in a trust deed in terms of powers (in no particular order):

    • borrow & raise money (they're not the same thing)
    • grant security
    • guarantee and indemnify
    • Trustee has right to be indemnified out of the trust fund
    • operate a bank a/c
    • carry on business
    • lease goods/property
    • appoint an attorney (I've heard some trust deeds from a prominent provider didn't address this but now fixed as I understand)
    • trustee can act despite conflict of interest
    • enter into derivative products/option facilities
    Bear in mind that some trust deeds will cover these things off with a generic grant of power to do everything an individual can do. That may or may not be okay dependant upon the transaction in question, the state in question and the other provisions of the trust deed.

    Hope that helps...

  3. Rob G.

    Rob G. Well-Known Member

    6th Jun, 2007
    Melbourne, VIC
    Nigel is referring to powers given to the trustee.

    If restrictive, then the deed can act like a straight-jacket and perhaps defeat the original purpose.

    I think Dave is referring to ability to stream income types. This is more of a problem with pre-CGT trust deeds that don't reconcile trust income with taxable income (net income). Not usually a problem with newer deeds, but should never be taken for granted.