Checklist to Set Up an Aussie Discretionary Trust
1. Select Trustee
- Decide if the trustee will be an individual(s) or a proprietary limited company.
- Understand the risks and responsibilities associated with being a trustee.
- Consider the advantages of a corporate trustee, such as limited personal liability and simplified administration.
2. Draft Discretionary Trust Deed
- Identify the beneficiaries.
- Specify the powers and determinations the trustee can make regarding income and capital.
- Detail financial aspects like trustee’s remuneration, taxes, and other expenses.
- Include provisions for personal interests or liabilities.
- Outline procedures for trustee’s appointment or removal.
- Contact a lawyer for professional assistance in drafting the trust deed.
3. Settle Trust
- Have the settlor sign the trust deed.
- Ensure the settlor is not a beneficiary and is usually unrelated to the beneficiaries.
- Transfer the initial settlement sum (usually $10) to the trustee.
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4. Trustee(s) Sign Trust Deed
- Organize a meeting for trustee(s) to accept their appointment.
- Ensure trustee(s) agree to be bound by the terms of the trust deed.
5. Stamping
- Check stamp duty requirements in your state or territory.
- Contact the relevant revenue authority or a local lawyer/accountant for assistance.
- Pay stamp duty within the specified timeframe to avoid interest charges (if applicable).
- Arrange stamping through the revenue authority, lawyer, accountant, or a service provider.
6. Apply for ABN and TFN
7. Open Bank Account
- Open a bank account in the name of the trustee.
- Ensure the trust deed is stamped before opening the account.
- Check if the bank requires the trust ABN.
- Deposit the settlement sum as the first transaction.
8. Trust Operational
- Start accepting contributions to the trust.
- Adhere to the terms of the trust deed for borrowing money and making investments.
Additional Notes
- Keep all records and documentation organized for reference and compliance.
- Regularly review and update the trust deed and other legal documents as necessary.
- Maintain open communication with all parties involved in the trust.
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