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Documentary protocols and disclaimers

A recent Full Federal Court decision reflects the diversity of issues which can arise in the complex world of discretionary trusts.

Recent comments by the Full Federal Court in Carter v FCT 1 remind us of the following:

  • corporate trustees should ensure that trust resolutions are made in accordance with trust law, the trust deed, the trustee company’s constitution, and the Corporations Act 2001 (Cth);

  • default beneficiaries of discretionary trusts seeking to disclaim an entitlement to the income or capital of the trust should be proactive and adopt precise and clear language; and

  • the tension between trust law and tax law continues to enliven difficult issues of statutory interpretation and policy.

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