An Australian trust exists under state law. So your trust may be under the laws of a state. E.g. New South Wales, Victoria, Northern Territory or any other state or territory.
This is called the trust’s ‘jurisdiction’. Can you change the ‘jurisdiction’?
Changing the jurisdiction of a trust?
This is when you change the jurisdiction from one state to another state. E.g. the trust is currently under Tasmanian law, but you now want it under Queensland law.
Reasons to change the trust’s jurisdiction?
You may wish to change your trust’s jurisdiction because:
- the trust’s assets are mostly in another state
- the trustee or appointor is now living in another state
- you are about to be sued and the trust may get favourable treatment in another Supreme Court
- the other state has tax advantages
- you want to move the trust to South Australia so that it doesn’t stop after 80 years
Why do we nominate a jurisdiction for a trust?
Legal Consolidated forces you to select a state as the jurisdiction when you build the trust deed on our website. This ensures that the governance of the trust relates to the laws of that state.
Each of the states and territories has its own trust legislation. This legislation varies from state to state.
Can the courts give the trust a ‘jurisdiction’?
In administering a trust, a court holds jurisdiction under common law when it exercises authority over the trustees (in personam), as exemplified by the ruling in Chellaram v Chellaram [1985] Ch. 409. However, incorporating a jurisdiction clause into the trust document may alter this standard practice.
Is the ‘jurisdiction’ I select for my trust conclusive?
However, this selection of governing law in your trust deed does not always yield definitive outcomes.
For instance, consider the perplexing scenario of establishing a trust in Victoria while selecting the governing law to be that of South Australia. Australian courts tend to disregard such a choice of law if it seems to have been motivated by ulterior motives, such as evading the application of a law that would otherwise be applicable.
From what Legal Consolidated has seen and the threats of the ATO, courts lean towards applying the law that shares the closest and most significant connection with the trust. Of importance:
- The location of the trust’s assets
- The residence or business operations of the trustee
- The location of the trust’s management and trustee
From the court’s perspective, these factors carry greater weight than the specific choice of law or the signing location of the trust deed.
Changing the jurisdiction triggers a ‘re-settlement’ and therefore suffers Capital Gains Tax and Stamp Duty costs
Legal Consolidated has seen from these changes of jurisdictions that they generally ‘trigger’ a ‘resettlement’. This means that all the trust assets are transferred from the ‘old’ trust to the ‘new’ trust. This is the case even though the trust has not changed. You, therefore, pay capital gains tax and stamp duty on the transfer.
Further, if the Australian Taxation Office feels that you just made the change to save tax then it will not give you the tax benefits. This is under Part IVA of the Income Tax Assessment Act 1936.
Family Trust |
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| Family Trust Deed – over 18,000 sold | |
| Family Trust Updates: |
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| 1. Everything – Deed, Appointor and Trustee (recommended) – includes succession planning |
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| 2. Upgrade the Family Trust Deed only – streaming, Bamford, trust law & tax |
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| 3. Change the Appointor – includes succession planning |
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| 4. Replace the trustee only |
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| 5. Change Name of the Family Trust | |
| 6. Exclude a Beneficiary in the Family Trust | |
| Company – Trustee of a Family Trust – corporate trustee for asset protection & business | |
| Company – Bucket Company – beneficiary of a Family Trust | |
| Annual Distribution Minutes for Family Trust – sign minutes before 30 June – ring us if building over 10 | |
| Forgive Family Trusts’ UPEs – human forgive money the Family Trust owes (UPEs & loans) | |
| Deed of Gift – to prove the money you put into your Family Trust was a gift (not a loan) | |
| Division 7A Loan Deed – company lends trust money to Family Trust (UPEs & loans) | |
| Loan Agreement – lend money to your Family Trust | |
| Vesting Deed – wind up your old Family Trust (Centrelink compliant) | |
| Training Course on Family Trusts – includes the Family Trust Deed |
Family Trust vs Other Business Structures
Firstly, let’s look at Family trust
- Family Trust Deed – watch the free training course
- Family Trust Updates:
- Everything – Appointor, Trustee & Deed Update
- Deed ONLY – only update the Deed for tax
- Guardian and Appointor – only update the Guardian & Appointor
- Change the Trustee – change human Trustees and Company Trustees
- The company as Trustee of Family Trust – only for assets protection?
- Bucket Company for Family Trust – tax advantages of a corporate beneficiary
Unit trust vs Family Trusts
- Unit Trust
- Unit Trust Vesting Deed – wind up your Unit Trust
- Change Unit Trust Trustee – replace the trustee of your Unit Trust
- Company as Trustee of Unit Trust – how to build a company designed to be a trustee of a Unit Trust
Business structures that are NOT trusts
- Partnership Agreement – but what about joint liability?
- Incorporate an Australian Company – best practice with the Constitution
- Upgrade the old Company Constitution – this is why
- Replace lost Company Constitution – about to get an ATO Audit?
Family Trusts vs Service Trusts
- Independent Contractor Agreement – make sure the person is NOT an employee
- Service Trust Agreement – operate a second business to move income and wealth
- Law firm Service Trust Agreement – how a law firm runs the backend of its practice
- Medical Doctor Service Trust Agreement – complies with all State rules, including New South Wales
- Dentist Service Trust Agreement – how dentists move income to their family
- Engineering Service Trust Agreement – commonly engineers set up the wrong structure
- Accountants Service Trust Agreement – complies with ATO’s new view on the Phillips case
