Anyone used acknowledgement/declaration of trust? Valid?

Hi all,

Question for the legal eagles - Is there any issue with signing a declaration of trust in the name of a family trust, then purchasing publicly listed shares in an individual name, then eventually transferring these shares into said family trust?

Will this trigger any capital gains issues or will the ATO see this as a clear pattern showing the assets were never intended to be beneficially owned by the individual?

The reason this would be done btw is because the paperwork for the trust to open a share account is still in progress.

My research only seems to find declaration of trusts in relation to SMSFs, not other types of trusts.

Thanks in advance!

 

These can work.

The documentation needs to be exact. I recommend a manual document in addition (so it cannot be crossed out) that is dated for every transaction.

The risk is that you start to cherry pick - for loss purchases that go to one entity and profit purchases magically find a fancy declaration of trust so they sit in another entity of your choice.

 

1. Get legal advice. What are the terms of that trust ?
2. Yes. CGT is triggered on execution of that declaration.
3. Tax File Number for the share registry ?

 

A declaration of trust will trigger a CGT event, but will it be taxable?

 

Are you saying you want to own shares as bare trustee for the trustee of a discretionary trust?

 

That could arouse curiosity and review by a trustee in bankruptcy. Legal advice on the asset protection effectiveness should be considered.

The problem that also arises is the trust / co financials and tax. These primary records should be prepared and may disclose what is intended to be blind. You cant hold assets on trust and show them in the company and vice versa. Failing to do this can result in all sorts of consequences on review. One factor that used to occur to trap some of these was duty on the share transfer - Thats gone (NSW) but the trust declaration is still dutiable.

Apparent purchaser deed may be something to ask lawyer about

 

Thanks for the responses Paul, Terry and Ross -

No, I dont think so - I don't care about secrecy/anonymity. It just appears for what I want to do the paperwork for getting the brokerage account into a family trust is quite lengthy and complex (this is not Australian shares I am wanting to purchase but shares from a foreign country) but for which I already have a valid account in my own name.

All I am after is a way (if possible) to purchase assets for the trust within these constraints...

 

Tip : Try Ord Minett / Pershing. We have found clients use them for this process (incl SMSF) and they simplify the whole process and I believe it ends up with Westpac Broking as a fairly seamless process.

 

Who is the trustee of the family trust?

If it is you, then you could buy the shares in your own name but you would need to be able to separately prove that you acquired these shares in your capacity as trustee (as this would not be evident from the share registry).

If not, then it would be best to acquire as a bare trustee for the trustee of the family trust. This would also need to be documented.