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  • Amending trust deeds is a difficult business.
  • Seemingly simple transactions can have a big tax effect.
  • Lawyers and accountants need each other.

You’re a lawyer and Pete’s an accountant. You have lived and worked in the same town for many years. You get on okay, but in the past you have been competitive in relation to clients – especially about succession planning. But now, at the urging of mutual friend Darcy, you have regular monthly meetings to discuss things. And Darcy always checks that you do.

Vesting date issues 

Pete tells you about a trust set up in 1981 which vests on the earliest of: (a) 21 years after the death of the last surviving descendant of King George VI alive when the deed was signed; (b) 40 years from 1981; and (c) whatever earlier date the Trustee resolves. 

‘If the trust vests in 2021,’ Pete explains, ‘there will there be a big CGT bill – so we have to extend.’

‘So,’ Pete says, ‘I will send you instructions to change the vesting date to 80 years from the date of creation – which would defer the problem to 2061.’

He says he’s checked the tax situation in ruling TD 2012/21 where the ATO indicates in an example that the vesting date for a 1981 trust could be extended from 40 to 70 years without reference to the Royal lives clause and without infringing the rule against perpetuities.

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