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The discretionary beneficiary – Thoughts on defining the beneficiary class

Published on 01 Jun 17 by "THE TAX SPECIALIST" JOURNAL ARTICLE

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.

Author profile

Dung Lam CTA
Dung Lam, CTA, is a Special Counsel at Coleman Greig Lawyers with more than 20 years’ experience in advising on a wide variety of taxes including income tax, capital gains tax, GST and state taxes such as duty, payroll tax and land tax. Dung also has extensive experience advising on taxation trusts, superannuation issues in the self-managed superannuation funds arena and tax issues related to estate planning. Dung is a Chartered Tax Adviser, full member of the Society of Trusts and Estate Practitioners, an accredited Specialist in Business and Personal Tax with the NSW Law Society, a member of the Business Law Section Taxation Committee of the Law Council of Australia and a member of the NSW Law Society Liaison Committee with the Revenue NSW. Dung advises a broad range of clients ranging from corporates, small to medium enterprises, high net worth individuals, professional firms, accountants, financial planners and their clients. - Current at 31 July 2020
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