Published on 26 Jul 12
by VICTORIAN DIVISION, THE TAX INSTITUTE
The sanctity of the discretionary trust as a vehicle for the protection of family wealth is rarely questioned. Yet Australian courts have been prepared to make, at least on an interim basis, orders in proceedings freezing trust assets where its controller becomes insolvent. While it has been some time since the Richstar case in 2006 more recently the Federal Court of Australia in Rafferty v Time 2000 West Pty Ltd (No.9) was prepared to make a freezing order over the exercise of the power to change a trustee of a discretionary trust. During the same period the 2006 Bankruptcy Act amendments, intended to provide greater access for creditors to family wealth generated by the bankrupt, remain largely untested. This presentation reviews the current state of play as to the means by which insolvency practitioners continue to seek to access wealth contained within trust structures and consider how effective they in fact are.