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Co-trustees, splitting, cloning: What to do with your trust

Published on 01 Mar 18 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

Trust splitting is an arrangement where parties to an existing trust functionally split the operation of the trust so that co-trustees own and control the trust assets in a manner in which each trustee owns and controls discrete trust assets (and the income from those assets), to the exclusion of all other trustees but on behalf of the same range of beneficiaries. While advisers have utilised trust splitting arrangements to assist their clients in estate and succession planning, the ATO’s renewed interest in trust splitting arrangements is a reminder to advisers of the need to take stock of the history of these arrangements to better respond to what will hopefully be positive ATO draft guidance. This article highlights the importance of understanding the distinction between trust splitting, cloning and the appointment of a co-trustee, even though many often use these terms interchangeably. Given that these types of restructures continue to raise many complex income tax, duty and interpersonal considerations, this article explores why these arrangements continue to be pursued by advisers.

Author profiles

John Ioannou CTA
John Ioannou, CTA was admitted as a Solicitor in 2002 and is a Principal Lawyer at Macpherson Kelley. He has experience in the areas of taxation, structuring, commercial transactions, disputes, trusts and estates, succession and asset protection planning. John has a Bachelor of Arts, Bachelor of Laws and a Master of Law. He is Chair of the Tax Institute’s Queensland’s State Council in addition to being a State Councillor. - Current at 04 November 2020
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Dominic Moon ATI
Dominic is a Principal Lawyer with a particular focus on providing practical solutions to contemporary taxation issues facing small to medium enterprises. His legal expertise traverses goods and services tax, income and capital gains tax, corporate tax including Division 7A, the consolidations regime, taxation of trusts and partnerships and state taxes and duties in all jurisdictions. With over 19 years of experience in legal practice, he also brings to his clients a broad experience in commercial transactions and contracts, estate and succession planning and business structuring and restructuring. - Current at 15 March 2021
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