North Sydney Commercial Lawyers

Family Trust Elections and the Extended FamilyPrint This Post

Family Trust Elections and the Extended Family

When the trust loss provisions were first introduced as an anti-avoidance regime, the solution to avoid being caught was to make a family trust election. If you made an election, most of the potential problems could be alleviated.

The problem is that the family trust election creates a family “tax” group, which does not necessarily reflect the family group: in-laws can become outlaws over time and the ex-spouse can become an outlaw too.

So any plan to pass control of a trust asset to a member of the extended family outside the family group covered by the elections can trigger a 46.50% tax liability on the value of that asset. Not a good look, particularly when there may be no cash available in the trust to pay for it!