Source: The Tax Specialist Journal Article
Published Date: 1 Jun 2017
Trust deeds were traditionally drafted with a wide telephone book style list of beneficiaries. A wide beneficiary class facilitates income splitting and obviates the need to amend the trust deed to include more beneficiaries in the future. Another key reason why trust deeds contained a wide beneficiary class is the concern that adding a beneficiary may otherwise cause a resettlement of the trust. However, since the Full Federal Court decision of FCT v Clark, the risk of a trust deed variation triggering a resettlement has greatly reduced. Given that trust deed variations are less likely to trigger a resettlement, the author suggests that the traditional wide way of defining the beneficiary class should be modified to capture people and entities who are likely to receive income or capital distributions from the trust, but not the whole telephone book.
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