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Bust-proofing trusts

Published on 01 Aug 14 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

Longstanding views about the form and level of asset protection afforded by trusts have been challenged and made less certain by a number of recent court decisions and legislative changes. This article explores the key issues to consider when seeking to “bust-proof” a trust, that is, to render a trust structure less vulnerable to challenge on taxation grounds. The article examines the consequences of recent family court decisions involving trusts, some practical recommendations when dealing with trusts in the context of structuring a client’s affairs, the impact of the decision in the Richstar case in 2006, some bankruptcy issues, and critical issues to consider whenever establishing or amending a trust deed. In the author’s view, for the time being, the benefits of discretionary trusts are generally still sufficient to make them the preferred structure for asset protection purposes, but great care should be taken when restructuring and establishing discretionary trusts.

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Author Photo - Matthew BURGESS
Matthew BURGESS

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