North Sydney Commercial Lawyers

Trust Resettlements and changing beneficiariesPrint This Post

Trust Resettlements and changing beneficiaries

Business Succession Update – Autumn 2013

Many professional advisors have formed the view that changing beneficiaries of a trust after Clark’s case (Commissioner of Taxation -v- Clark [2011] FCAFC 5) is a no-brainer and that there is no stamp duty risk in such circumstances. Nothing could be further from the truth.

At the risk of oversimplifying the facts, Clark’s case dealt with the creation of a new discretionary class of units. None of the members of the Full Federal Court considered that this gave rise to a resettlement.

Clark’s case itself gives very limited guidance on how courts would deal with changes to the default beneficiaries of a discretionary trust. And whilst TD 2012/21 explains that the addition or withdrawal of discretionary beneficiaries will not amount to a resettlement – thereby avoiding CGT and stamp duty implications – it is also silent on the issue of changes to the default beneficiaries of a discretionary trust. Stay tuned…