A Matter of Trusts

Taxation in Australia Journal

the trustee of a discretionary trust may benefit those who fall under the definition of “beneficiaries” in the trust’s deed. Sometimes, the scope of that definition is unclear.

The trustee of a discretionary trust (sometimes known as a “family trust”) holds property on trust for beneficiaries. The trustee is empowered under the trust deed to make distributions of income and capital to those beneficiaries at its discretion. Each discretionary trust deed employs different terminology, but most deeds will list, either in a definition clause or a schedule, the “primary beneficiaries” of the trust, which may include a particular individual, that individual’s spouse, their children and their lineal descendants. “General beneficiaries” or “secondary beneficiaries” may include broader relatives of the primary beneficiaries, such as siblings, spouses, widows and widowers, cousins, and nieces and nephews. Other structures may also fall within the class of general beneficiaries, including charities, companies controlled by one or more of the primary and/or general beneficiaries, and trusts of which one or more of the primary and/or general beneficiaries is a trustee, director of a trustee company, or a beneficiary.

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