Individuals as trustees holding asset for trust

Discussion in 'Accounting & Tax' started by richard786, 26th Mar, 2021.

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  1. richard786

    richard786 Member

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    I am wondering if two individuals are acting as trustees of family trust, can each of the individual trustees holds asset for the trust, or do they have to hold the asset jointly. On the trust deed, it lists two names as trustees (with an 's'), not trustee.

    For example, when holding a company share, can we just have one of the trustees on public record holding the share and the "beneficially held" questions is set to "no"? Or do we have to have both trustees' names appear on the company records if we want the share to be held by the trust?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    it could be either or someone else even that holds the assets. Generally though title should be in the trustee's name. If 2 trustees then both should be on title.
     
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    One of the evident issues with human trustee/s v a corprate trustee is that on a change of trustee, a death of trustee or any succession or change of trustee due to the appointor acting etc then the asset should change legal owner. This can be a pain and even involve minor (registry, late ASIC changes or land titles) costs but shouldnt ordinarily be dutiable. (Exceptions apply)

    This problem is most evident with SMSF trusts that choose the cheap trustee option. Everytime a mmeber is added or removed all assets must change - including new bank accounts !!

    Shares would normally be legally held in joint names and also be held non-beneficially. Its not uncommon this is overlooked and the evidence of trust can extend to financial records etc. In the very worst cases back to contracts etc. It is better that legal title is correct especially upon death when there is nobody to explain.

    I have asked several lawyers over many years why multiple human trustees are allowed but ONE corporate trustee is generally only permitted and I have NEVER seen a trust deed that allows multiple company trustees. The best explanation received from a barrister was that he thinks human trustees can be jointly and severally liable (eg under tax law) but a company would not want to be jointly and severally liable with another as that may be a breach of duties for the Directors of each company. And that is inconsistent too with the concept of limited liability and extend outside the company. It may also confuse and compound issues involving succession and control where two or more humans may each act as one unanimous choice where two companies cannot.
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I have never seen a trust deed that didn't allow multiple companies as trustee - but not something I have been specifically searching for.
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I had this asked by a barrister who challenged me as to why all deeds refer to a trustee / trustees yet often only refer to a singular company. "The trustee" being commonplace incl in T Waugh deeds usually with another clause which is expansive of one or more trustee/s. Yet a SMSF cannot seemingly have two companies as trustee s13 SISA and s17A(1)(b) and (c) . Is one view incorrect ? What limits a SMSF trust ? And why ? After months he finally explained he didnt think two companies SHOULD act as trustees and SMSF laws specifically addressed this limitation to avoid serious compromise of the fundamental basis for a smsf where all members are trustees or trustee Directors etc for equality in decision making. Some law council also had concern about voting power with two trustees being equal of voice for all members. I remain unconvinced as to why two companies should ever be trustees for a trust without quite high level legal advice. It is likely more practical to have a special purpose corporate trustee with equal control by several parties for control and to limit risk. decisions of that one body are made more unanimous when passed rather than each making a decision and evidencing that.
     

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