Supperannuation and Wills

That is true, it depends on the druation of the marriage. This is apparently broken down into short marriages & long. Short is generally <4 Years with long being >4 Years, so it doesn't take long for the wealth transfer to occur.

This is also true but once a marriage >4yrs then a lot of the conditions are eroded away (i.e. contribution has little weighting, etc).

For longer marriages 50% generally is the starting point, and variations are made from there, i.e. if they have a child and divorce and the mother gets custody of the child then is likely she will get more than 50%.

The point I was making about the grandparents trust is, if say the father was the sole remaining beneficiary, it may be argued that the assets should be treated as if he owned them (essentialy he does).
[/quote]

………………………………………………………………………………………

A trustee just manages the trust (investment decisions, regulation, etc) following within the guidelines of the trust, the appointor just appoints them. The assets are owned by the trust and the trust has beneficiaries.
If your father was sole beneficiary then it could be argued that they are his assets. If it is seen that a trust has been setup for the purpose of transferring assets from the marriage, i.e. swindling his wife, then I believe it would be challenged successfully that the assets should be considered as property of the marriage.

Was it a proper legal document? and did both parties recieve independent legal advice? Also was the agreement considered fair? these will be things taking into account by a judge when deciding over the validity of the agreement. Also if they had a child, then the agreement is likely nullified. Any major material changes means a new agreement must be formed.

For the most part I think that is probably true.But I think a large part of it comes down to who are the beneficiaries and how many. If he was sole beneficiary I wonder if It could be challenged, (because it could be considered as an income source of which he gets 100% of distributions). When there are varied people as beneficiaries I think it's more likely safe.

Just my thoughts anyway.

If a trust only has one beneficiary then it is called a bare trust. eg. A owns X for B. B is the true owner and A is the legal owner. There is no discretion here. It is very unlikely that the grandfather's trust would have only 1 beneficiary.

The grandfather's trust is probably a discretionary trust – which is what we have been mostly assuming above.

You would also have to look at the trust deed to determine the powers of the trustees and appointors. An appointor may have broad powers or virtually none. It all depends on the deed.

If the appointor has the power to appoint a trustee (which they usually have, hence the term) then they could appoint themselves as trustee and make a resolution to distribute all the assets of the trust to themselves. This would be done within an hour or minutes even.

Therefore if it was me I would be wanting to control the role of appointor.

BTW, any movement of assets into a trust to defeat creditors can be clawed back under the bankruptcy provisions. Usually indefinitely if the transaction had this intention and was done at less than market value.

The appointor couldn't have any control over a company. It would generally be the shareholders of the company that appoint the director. Of course the same person who is shareholder could also be appointor, but these are separate roles and entitites.

Depends on the wording of the deed again. Often deeds are worded so that if the trustee fails to make a distribution of income or if a resolution to distribute fails then the principle beneficiary may be deemed to take the income. This would prevent the trustee paying tax at the top marginal rate if a mistake happens.

An executor is the legal representative of the deceased person for the purpose of distributing their estate. It could be possible for an executor to be appointed as appointor by a will but again depending on the deed if the deed doesnt allow it then I don't think so. But it is probably not a good idea as this person would control both the trust and the executor you plan on may not end up in the position. Best to have it clear in the deed I think.

Its very common to have 2 trustees

A company could be a trustee in addition to them both, though unlikely.

I wonder if they have had the deed updated? There have been huge changes over the last few years – eg the introduction of GST!

The appointor is likely to be one or both of them I think. Unlikely to be the accountant, you hope anyway.

Also, if you are a beneficiary of the trust you probably have a legal right to view the trust deed and to view the financial records of the trust – even if you have never received a distribution.

Depends how involved the accountant is.

Deeds will need to be updated this year to meet the changing definition of 'income' and other complicated issues following the famous Bamford case. Otherwise extra tax could be payable.

Another point.

If the trust was established 35 years ago you should have your grandfather check the vesting or winding up date. Trusts can last 80 years max, but many of the older trusts were set up with much shorter lives for some reason.

When the trust ends all the property must be transferred and CGT may be payable – hopefully he has some pre 1985 assets in there with no CGT.