Trusts need to be set up properly or you may have an invalid trust. For example, it is a requirement that a settlement sum be paid. This is usually for $10.
In the case of Ashton, Mr Nicholas Corcoris was a property investor who purchased properties through trusts. Mr Corcoris prepared the trust deeds himself, without the help of professionals.
Mr Corcoris and other entities associated with him objected to assessments made by the Commissioner of State Revenue. They alleged the Commissioner wrongly assessed transfers of property on the basis that the Commissioner did not have regard to the face that the properties were held in trust.
The Tribunal found that:
- for each trust, there was no evidence of the payment of a settled sum to establish the trust;
- there were a large number of errors and inconsistencies in the trust schedule, execution pages and associated minutes that were exhibited;
- because there were no trust deeds, there was no evidence of any undertakings by the trustee to hold the transferred property for the unitholders – therefore, each trust lacked certainty of intention, which is an essential element for any enforceable trust.
- found that the ‘trusts’ Mr Corcoris created were ‘nothing more than trust schedules, sometimes combined with trustee execution pages’.
- The trusts did not exist.
- The appellants were not entitled to any tax benefits that would have otherwise been available to the trustee companies in the purchase and transfer of the properties.
Failing to pay the settled sum (or failing to show that the trust deed is complete and properly executed) may:
- result in the trust being invalid;
- open the trustee to potential liability; and
- create a barrier to the tax and other benefits that trusts are created to enjoy.
Your trusts and companies need to be set up correctly by professionals. Failing to do so can prove very expensive.
Contact us on 07 3891 3333 to discuss your structure to ensure it is valid and offers asset protection and tax effectiveness.