Avoid Costly Mistakes When Amending Your Trust! (Part 1)
Thinking about adding or removing beneficiaries in your trust? Before making changes, it’s crucial to check your trust deed! In this video, I explain the potential pitfalls, including tax complications and legal issues, that can arise if the process isn’t followed correctly. Learn how to ensure compliance, avoid resettlement risks, and protect your assets.
Need expert advice? Contact Ross Millen or any of the Millens staff for a trust review today.
VIDEO TRANSCRIPT
Ross Millen:
Hi. I wanted to speak to you over the next couple of videos about trusts and some of the pitfalls that you can fall into with trusts. Now, sometimes it's necessary or a good idea for you to amend your trust. You want to add some new beneficiaries, or maybe you want to delete some beneficiaries, maybe there's been a matrimonial situation. For any sort of reasons. There may be you want to take beneficiaries out or add new beneficiaries in. Now, the main thing, and I must stress this, the most important thing is someone's got to very, very closely read the trust deed because the power to amend beneficiaries must be found inside the trust deed.
Now, why is that? Well, the courts have decided in taxation situations that as long as you're performing something that the original trust deed intended, where there might be a power to add or remove beneficiaries, that's fine. Where there's no such power in the trust deed, question if you can do it. And even if you do, then maybe that's going to be what they call a resettlement, where the assets of the trust are deemed to be transferred into a new type of trust with all sorts of capital gains tax or maybe stamp duty problems, and that's something to definitely be avoided.
So the trust deed has got to be read very clearly. Then, you've got to make sure that you follow whatever the process is in the trust deed. Maybe you need the appointor's approval. Maybe you've got a guardian or someone else who's got to give approval, or you've got to give a certain number of days' notice. So you've got to make sure that when you're amending your trust deed to add or remove beneficiaries, you follow exactly what the trust deed says. Then, of course, you've also got to make sure that the power to amend the trust deed, you follow what's in the trust deed in that respect. So there can be really very bad consequences if you don't clearly follow what you want to do.
Now, if you've got any problems with your trust deed, you want us to review it, you need any amendments, remember to contact me, Ross Millen, or anyone else at Millens. We'll be able to help you amend your trust deed so that you avoid all of these pitfalls and achieve what you set out to start to do. Thanks for listening.
