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Discretionary (Family) Trust Minutes & Resolutions

Use Cleardocs to create a range of Minutes and Resolutions for a Discretionary (Family) Trust. These Minutes and Resolutions record many of the most important decisions made by a trustee when operating a Discretionary (Family) Trust including income distribution and deed amendments.

$71.50
12 months use of the Package for each trust
  • Cleardocs fee incl GST $71.50
Product Benefits
  • The trust does not require an underlying Cleardocs deed
  • Covers a wide range of trust transactions or events including income distribution and deed amendments
  • Minutes and Resolutions stored online for future access
  • Extensive online help and local phone support
  • Easy to use question interface
  • Pre-population of trust details from earlier Cleardocs orders - saving you typing
Product Information

What Discretionary Trust Minutes and Resolutions are available through Cleardocs?

Cleardocs offers the following family trust Minutes and Resolutions:

  • establishment of the trust;
  • open a bank account for the trust;
  • distribution of trust income;
  • amendment of the trust deed;
  • appoint a trustee in place of a retiring trustee;
  • appoint an appointor; and
  • winding up of trust.

Together with each Minute or Resolution, you will receive an Establishment Kit explaining what to do next.

What information do you need to order a Discretionary (Family) Trust Minute or Resolution through Cleardocs?

To create a Discretionary (Family) Trust Minute or Resolution, you complete the Cleardocs question interface with:

  • the type of Minute or Resolution you wish to create;
  • the name of the trust;
  • for a Minute: details of the meeting (if relevant) — date, time, place, attendees, name of chair;
  • for a circulating Resolution: the date the resolution will be circulated (if relevant);
  • details of the transaction or event to which the Minute or Resolution relates; and
  • if the relevant Minute or Resolution also requires a meeting of the members of the appointor — the details of this meeting too.

Minute or Resolution?

Trustees of discretionary trusts can make decisions:

  • where there are individual trustees — at meetings;
  • where there is a corporate trustee with more than 1 director — at meetings of directors, or by all of the directors signing a set of resolutions; or
  • where there is a corporate trustee with 1 director — by the sole director signing a set of resolutions.

The Cleardocs Package lets you choose the option which is most suitable for your particular trust.

Cleardocs deed not required for Cleardocs Discretionary (Family) Trust Minutes & Resolutions

To use this Cleardocs Package, a trust does not require an underlying Cleardocs deed.

If the trust does not have a Cleardocs deed in place, you should review the deed to ensure the Minute or Resolution is consistent with the procedures set out for the particular transaction or event. This is particularly important for the distribution of income minute. If you are unsure, you should obtain your own legal, financial and accounting advice — we cannot give you that advice.

Amending the trust deed: a word of warning

If you need to vary your family trust deed, you must engage a lawyer to draft the necessary changes. A lawyer must consider the proposed changes to ensure that the change — such as amending named beneficiaries or classes or beneficiaries — does not trigger the creation of a new trust (there are tax implications to be aware of with this) and that the variation process described in the deed is followed.

Seek legal advice

The Discretionary (Family) Trust Minutes & Resolutions information here should be considered general in nature, and in no way interpreted as legal advice. You must always seek your own independent legal, accounting and financial advice about your particular situation. The summary on this page is for information purposes only.

Frequently Asked Legal Questions

Cleardocs is not a law firm. So as with all the legal material on this site, the answers to these "frequently asked legal questions" are provided by the law firm Maddocks. Cleardocs does not endorse those answers.

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Does the trustee of a discretionary trust decide what is the 'income' of the trust?

The definition of the 'income of a trust estate' is important as it determines who - the trustee or the beneficiaries of a trust - is liable to pay tax on the taxable income of the trust estate. This issue attracted considerable attention in 2010 in Bamford's case, which is authority for the view that the income of the trust is whatever the trust deed determines it to be.

The trust deed will set out whether the trustee has power to decide what is the 'income' of the trust.

If your discretionary trust has a Cleardocs trust deed: Yes, the trustee decides. The Cleardocs discretionary trust deed contains a 'default' definition of 'income of the trust fund'. The trustee may, at any time prior to 30 June in a financial year, decide to adopt another definition of 'income of the trust fund' for that financial year and the trustee can do so by signing a minute to this effect.

If your discretionary trust does not have a Cleardocs trust deed: Your trust deed may or may not allow the trustee to decide what is the 'income' of the trust. You should check the terms of your trust deed and obtain professional advice about whether the trustee has the ability to adopt a different definition of 'income' - and in what circumstances.

Does the trustee of a discretionary trust have to distribute all of the net income of the trust in a given financial year?

This depends on the terms of your trust deed.

If your discretionary trust has a Cleardocs trust deed: The trustee does not need to distribute all of the net income of the trust in a given financial year: rather, the trustee has the discretion to either distribute or accumulate the income. If the income is accumulated, it is taxed in the hands of the trustee at the highest marginal tax rate and becomes part of the capital of the trust fund.

The trustee must make a decision whether to distribute or accumulate the income by 30 June in that financial year. If the trustee does not exercise their discretion, the trustee will lose their discretion in respect of income in respect of which the discretion has not been exercised, and the income will be automatically distributed to certain beneficiaries in accordance with the trust deed (and held on trust pending payment).

If your discretionary trust does not have a Cleardocs trust deed: Your trust deed may or may not require the trustee to distribute all of the net income of the trust in a given financial year. You should check the terms of your trust deed and obtain professional advice about your trust deed's requirements.

Can the trustee of a discretionary trust distribute a dollar amount rather than a percentage of income of the trust?

Yes. When you order from Cleardocs, in the minute or resolution resolving to distribute and/or accumulate net income of the trust, you can specify either:

  • percentages (up to 100%) that each beneficiary is to receive; or
  • maximum dollar amounts that each beneficiary is to receive - and to whom the balance of the net income less these dollar amounts (if any) will be distributed.

Before choosing the second option, the trustee will need to ensure there is sufficient income of the trust to make the distribution. If the trustee makes a resolution to distribute income it does not have - or fails to make a decision with respect to income it does have - this can cause issues (see above).

How can the discretionary trust deed be varied?

You will need to check the terms of your trust deed. Also, you should be mindful of the potential tax implications of varying a trust deed.

If your discretionary trust has a Cleardocs trust deed: The trustee may only vary the trust deed by executing another deed. If there is an appointor, then you need it to consent. The Cleardocs Discretionary Trust Minutes & Resolutions document package includes a minute or resolution to amend the trust deed by approving and signing a deed of variation.

If your discretionary trust does not have a Cleardocs trust deed: Your trust deed should set out how (and with whose consent) the trust deed can be varied. You should obtain professional advice about how to vary the trust deed.

Are there potential tax implications of varying a discretionary trust deed?

Yes, if the variation results in a "resettlement" of the trust.

A "resettlement" occurs when a change to an existing trust is so substantial that it is considered, for tax purposes, the trust has been terminated and replaced by a new trust. Stamp duty and CGT can apply, depending on the trust assets.

The Australian Taxation Office's approach to this issue is currently unclear, given that the ATO's Statement of Principles on the creation of a new trust - which set out the ATO's view on what kind of changes may or may not involve a termination of an existing trust (such as extending the duration of the trust) - was withdrawn in April 2012 and has not yet been replaced.

If you are considering varying your discretionary trust deed, you should obtain professional advice about the potential tax implications. Cleardocs cannot give you this advice, but can arrange for you to speak with our lawyers at Maddocks to obtain a free quote to advise you on the potential tax implications.

How can an appointor of a discretionary trust be appointed?

This depends on:

  • the terms of your discretionary trust deed;
  • whether the existing appointor is still alive; and
  • whether the existing appointor wishes to appoint an additional or replacement appointor.

If your discretionary trust has a Cleardocs trust deed: If your trust was established with an appointor, the current appointor may appoint:

  • an additional or replacement appointor by deed; or
  • a replacement appointor by will.

If your discretionary trust was not established with an appointor, and you wish to provide for an appointor, call the Cleardocs helpline on 1300 307 343. We will put you in touch with a lawyer from Maddocks who can discuss varying your trust deed to include this position.

If your discretionary trust does not have a Cleardocs trust deed: The terms of your trust deed will set out the relevant process. You should obtain professional advice about your trust deed's requirements on this point.

When can a discretionary trust be wound up?

This depends on your trust deed.

If your discretionary trust has a Cleardocs trust deed: The trust ends, and the trustee is required to wind up the trust, on the 'vesting date'. The 'vesting date' is 80 years from the date of the trust deed, unless the trustee determines the trust will vest earlier. If the trust has an appointor, they must consent to an earlier vesting date.

If your discretionary trust does not have a Cleardocs trust deed: Your trust deed will (or should) set out the relevant process - and whose consent is required. You should obtain professional advice about your trust deed's requirements on this point.

How is a discretionary trust wound up?

The trustee of a discretionary trust should obtain legal and/or accounting and financial advice prior to proceeding with a winding up of the trust.

The main steps involved in winding up a discretionary trust include:

  • obtaining any required consents under the trust deed (for example, from the appointor, if there is one);
  • obtaining final financial accounts for the trust (for the purpose of determining the trust's assets and liabilities);
  • calling in all the trust's assets including, where the trustee thinks fit, converting the trust's assets to cash;
  • considering tax (including CGT and duty) issues involved in the sale of trust property;
  • calculating and paying all of the liabilities including on account of any income tax or other duty;
  • distributing all the trust's income and capital to the beneficiaries in accordance with the trust deed;
  • preparing and lodging the trust's final tax return; and
  • notifying the ATO of the trust's winding up and termination.

What must the trustee do with the income and capital of the discretionary trust when it is wound up?

The trustee must deal with the income and capital of the trust in accordance with the trust deed.

During the life of the trust, the trustee must only distribute income and capital to beneficiaries under the trust deed - the termination of the trust does not change this.

Tax considerations will be a factor in determining to which beneficiary or beneficiaries the trustee wishes to distribute income and capital.

The trustee should obtain financial and/or legal advice if unsure how to effect the final distribution of the trust's income and capital.

Are there any stamp duty implications involved in winding up a discretionary trust?

Yes.

When the trust is wound up, all of the income and capital of the trust must be distributed to the beneficiaries. Depending on the type of property distributed, stamp duty may be payable by the recipient of a transfer of any 'dutiable property' (property that may attract duty) from the trustee.

Each state and territory has its own stamp duty regime - and the types of property which attract duty, the rates of duty and available exemptions all differ. You should obtain professional advice about the tax implications of winding up a trust - including whether any stamp duty will be payable on the transfer of trust property.


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