Trust Lawyers for Family and Business Trusts

Kallan Lawyers advises on discretionary and unit trusts for families, business owners, trustees, accountants and financial advisers. We prepare new trusts, but most of our trust work concerns trusts that already exist: deeds drafted decades ago, variations made along the way, and control arrangements that no longer match what the family or the business needs.

Trust law sits at the intersection of three things that are usually advised on separately: the terms of the deed, the tax consequences of acting on it, and the commercial or family outcome you are trying to reach. Our principal is a lawyer with an accounting and taxation background, so that overlap is where we are most useful.

The deed decides

A trust is not a creature of general principle. It is a creature of its own deed. Two family trusts established in the same year by different providers can differ on nearly every question that matters:

• who may be appointed and removed as trustee, and by whom
• whether there is an appointor or principal, and what that role can actually do
• how wide the class of beneficiaries is, and whether it can be narrowed
• what the trustee may do with income and capital, and how distributions must be made and recorded
• how the deed may be amended, and what consents an amendment requires
• when the trust must vest, and who takes the property when it does

A great deal of trust advice fails because it is given on the basis of what deeds usually say. Before advising, we read the original deed and every variation since. Where the chain of documents is incomplete, that is itself a problem worth knowing about early rather than at the point of a sale, a bank application or a death.

Control matters more than entitlement

Clients often assume the important question is who the beneficiaries are. Usually it is not. A beneficiary of a discretionary trust has no fixed entitlement to income or capital. They have a right to be considered. The person who decides what actually happens is the trustee, and the person who decides who the trustee is, often the appointor, sits above that.

That has practical consequences for asset protection, for family disputes, for business succession and for estate planning. It is also why control of a trust is rarely dealt with adequately by a will. If the trust holds the assets, the question is who controls the trust afterwards, not who inherits the trust property.

A will deals with what you own. It does not, by itself, deal with what your trust owns. Those are different questions, and they are answered in different documents.

When a trust needs legal attention

Trusts tend to be left alone until an event forces the issue. The events that most often bring clients to us are:

• A transaction. A sale, a refinance or a new investment, where a bank, purchaser or incoming investor asks questions about the deed that nobody has asked before.
• A change of control. A trustee retiring, a falling-out, a move from individual to corporate trustee, or the death or incapacity of the person who has always run the trust.
• A change in the family. A marriage, separation, blended family or a beneficiary whose circumstances mean a distribution would be unwise.
• Tax or duty exposure. Foreign-person surcharges, land tax, trust loss rules, unpaid present entitlements, or an ATO position that makes an existing distribution pattern uncomfortable.
• An approaching vesting date. Older deeds are now within sight of the end of their perpetuity period, which is a deadline with real tax consequences.
• A dispute. Between trustees, between family members, or over how a discretion has been exercised.

Tax and duty sit over everything

Almost every meaningful change to a trust has a revenue dimension, and it is usually the reason a technically available step is still a bad idea. Varying a deed beyond the scope of its amendment power may be ineffective. A change fundamental enough to be treated as creating a new trust can trigger capital gains tax and, where the trust holds land, duty. Narrowing a beneficiary class, changing unitholdings, or altering entitlements can each have consequences that are invisible in the deed itself.

We advise on the legal question and the revenue question together, and we say plainly when the sensible answer is to leave a deed alone.

Working with your accountant or adviser

A large part of our trust work comes from accountants and financial advisers, and we are comfortable working alongside them rather than around them. In practice that means we give the legal advice and prepare the documents, while your adviser keeps the relationship and the compliance work. Where a proposed step has a tax outcome your accountant will have to live with, we would rather discuss it with them before it is documented than afterwards.

This page is general information about the kinds of matters we advise on. It is not legal advice, and the terms of your particular trust deed will change the answer.