Source: Taxation In Australia Journal Article
Published Date: 1 Nov 2014
Discretionary trusts have been popular as trading entities and for asset protection purposes in Australia for decades, for various tax-related reasons. This article examines the law relating to “takers in default”, ie persons who would annually take the income of the trust and who, at termination of the trust, would take the capital in default of the trustee exercising its powers in favour of other beneficiaries, in the context of exposure of the trust fund in the event of financial or marital misadventure by a beneficiary.
The article considers the effect on the validity of a trust of the absence of default beneficiaries, in the light of the rules about certainty of objects and perpetuities, and the distinction between “mere powers” and “trust powers”.
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