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Lecture 4

AYB205 Week 4 - Trusts

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Queensland University of Technology

 Created when a person (Settlor) grants ownership of property to a person (Trustee) for use for the benefit of certain others (Beneficiaries) o Appointer may be created by T–remove o Trustee may = Beneficiary but ≠ not the sole T’ee, appoint another Beneficiary o Settlor can = Trustee o Trustee can be a co  Mainly used to distribute wealth, protect property from disbursement or as a tax minimisation method Advantages Disadvantages  Income splitting for tax  Complex legal structure – difficult for S/T’ee to  Asset protection i.e. limited liability understand rights/obligations  Responsible control of trust funds/assets – variable  Money/other assets can be comingled with t funds/a depending on the type of trust (MUST be stated)  Admission of new investors/beneficiaries is difficult  Continuity of existence and complex depending on trustee deed  Privacy  Banks do not generally loan $$ due to protect given  Flexibility to deal with assets under the law to T assets Trusts and the Law  Part of private law (state is not involved).  Trust is created by agreement between the parties entering the Trust Agreement by: o Written deed – not formally rendered o Implication through parties words/conduct o Formal trust agreement  NOT a separate legal entity or legal person  Does not exist independently of the Trustees/Beneficiaries – creases to exist when Trustee and B do  Trustee has legal ownership (legal title) but does not ‘own’ property in any meaningful way  Beneficiary has beneficial ownership (equitable title) of the property e.g. they get benefit of property  Legal rights and obligations of Trustee are fully provided for in the law o Governed by state/territory law  Trusts Act 1973 (QLD)  Property Law Act 1974 (QLD) o Governed by common law/equity o Regulated through the terms of the Trust Deed where it exists  No contractual relationship between parties  Trusts are not perpetual – property must be distributed to the beneficiaries within 80 years of the Trust Deed being signed or the Court holds that the Trust came into being s209(1) Prope
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