Why change the name of the Family Trust?
QUESTION: If the Family Trust name doesn’t really do anything why change it? It is not registered anywhere. It is just a nickname to help the Accountant, who may be looking after 100s of other Family Trusts, identify mine a bit quicker? Why change Family Trust Name?
ANSWER: Fourteen reasons to update the name of a Family Trust
There are some reasons to update or change your Family Trust Name:
- correct spelling errors (e.g. Smitth Family Trust)
- husband has died (e.g. Coral & Ted Smith Family Trust)
- wife has divorced you (e.g. Joanne and John Lee Family Trust)
- your family name is distinctive and for privacy, you want it removed from your family trust (e.g. Barlowe Family Trust)
- name is not as clever as you first thought (e.g. Scrooge McDuck Family Trust)
- name may upset the ATO (e.g. Get out of Tax Family Trust)
- the name of the trust scares banks (e.g. the 38 Warren Street Development Trust, suggests that you are a property developer)
- your parents died
- you may want to not be so obvious that the Family Trust is also a ‘Service Trust‘ for your main business (e.g. Williams Service Trust)
- the Family Trust name is too long (long Family Trust names do not fit on bank mortgage statements, ATO and ASIC forms)
- the Family Trust name identified its purpose but that purpose has changed (e.g. Ramsay Road Clear Mountain Trust)
- the Family Trust name has symbols in it, and banks, ASIC and the ATO forms cannot cope (e.g. ‘The Regus’ 27/34, 42 – 48 George Street, NSW – Holding Trust)
- you have been numbering your trusts, e.g. Smith Family Trust No. 2; Smith Family Trust No. 4. The banks and the ATO now want to see all the other trusts as well
- your trust name contains words that are illegal or suggest that you hold a licence or are related to other businesses (e.g. Bank, Building Society, BHP, Incorporated, Royal, Commonwealth)
Does the new name of my Family Trust have to be unique?
A trust name is similar to the name of a human being. Just as many people have the same name, so to, many trusts have the same name. E.g. Jones Family Trust.
Your Family Trust does not need a unique name. Family Trust (Discretionary trusts) like unit trust names are not registered with a governing body. In contrast, company names are registered with ASIC.
To overcome this problem the government stamps every human and every Family Trust with a number. For example, a human may have a Tax File Number. A Family Trust may have a unique Australian Business Number (ABN) identifier.
Any taxation or CGT issues when you change the name of your Family Trust?
There are generally no taxation issues when you update the Family Trust name. With every document, you build on our website you get a letter on our law firm’s letterhead. The letter confirms there are generally no taxation issues when you correct the Family Trust name.
No resettlement of the Family Trust – when you change the Family Trust name
A Family Trust is a relationship. The trustee holds property on trust for the benefit of the beneficiaries.
A Family Trust deed sets out the terms of the trust. This includes the duties of the trustee in holding the trust property.
There are many reasons why the Appointor instructs the Trustee to amend the Family Trust Deed. The difficulty arises in deciding what kinds of amendments can be made to a trust deed without causing a resettlement. In other words, when do amendments to a Family Trust deed cause a new trust to be created?
We confirm that the Legal Consolidated Deed of Variation of the Family Trust to change the trust name does not trigger a resettlement.
Any stamp duty when I update the name of my Family Trust?
Your local stamp duty office may require that the Deed of Variation of Change the Family Trust Name (and all copies) be lodged after signing. However:
- there is no need to get the Legal Consolidated Change of Family Trust Deed stamped in Western Australia, Queensland, South Australia and the Australian Capital Territory; but
- in all other States and Territories, Deeds of Variation must be lodged for stamping, and nominal lodging fees apply.
If another law firm prepared your Deed of Update for the Family Trust Name, then check with that law firm. Each law firm drafts the legal document differently.
Let the ATO know that I have changed the name of the Family Trust?
When you update the name of your Family Trust your accountant will let the ATO know.
The trust name should be consistent from year to year, except in the year of a name change when you lodge your trust accounts.
Keep your original Family Trust Deeds and all variations
We make special mention of the enclosed Minute regarding you needing to hold and retain, forever, original deeds. If you do not retain original signed deeds, you will not be able to open bank accounts or borrow money. Copies are not good enough. Even certified copies of Family Trust deeds and variations are not good enough.
You need to show the bank original trust deeds.
Ensure that both you and your accountant retain original deeds. They are precious and usually impossible to replace.
Telephone us. We can help you answer the questions to correct the Family Trust name.