Settlor of a discretionary trust

From what I read on the internet, acting as a settlor for a discretionary trust is pretty much a favour done by the settlor to the trustee, and in order to set up a discretionary trust, the trustee needs to find a person who's willing to do this favour. Whom should the trustee normally approach in this regard? Does the lawyer (or the accountant) who is to draft the trust deed normally agree to also act as the settlor for the same trust? Any experiences or advice would be much appreciated.

 

Accountants cannot draft deeds as this is legal work. They often set up trusts though, even though they are breaking the law in doing so.
Neither the accountant or lawyer should act as settlor as they are prohibited from benefitting from the trust. That would mean they cannot be paid for future work done or for the set up of the trust.

The settlor should be a friend of the person setting up the trust - someone in the same state to avoid duty issues and should be over 18. They should never be family or someone the person behind the trust may want to do business with in the future.

 

The location of the settlor at the time the deed is settled should also be considered. It would be very unwise to settle a deed in Sydney (based on the location of the accountant) when the trustee and beneficiaries are in QLD. Many accountants make that mistake. This could lead to $500 stamp duty being imposed (or an unstamped deed !)

Many solictors will act as settlor as they will do so in a personal capacity v that of the practice which is a company. I have no idea if that assists to alleviate any benefit issues.

 

I heard a story about a lawyer who settled a trust - he was the boyfriend of the persons daughter.

Daughter and her family is a beneficiary.

Fast forward, daughter now married to the lawyer. Hmmm.

 

I saw one where the settlor was the son of the person setting up the trust.

There is no legal reason why the settlor can't be a beneficiary other than for tax reasons.
Tax Tip 179: Tax Issues when a Settlor is a Beneficiary of a Trust Tax Tip 179: Tax Issues when a Settlor is a Beneficiary of a Trust

 

Legal Tip 180: Can a Settlor also be a Beneficiary Under a Trust Legal Tip 180: Can a Settlor also be a Beneficiary Under a Trust


Legal Tip 324: Notional Settlors in Trusts Legal Tip 324: Notional Settlors in Trusts


Legal Tip 167: What is a Settlor? Legal Tip 167: What is a Settlor?

 

Many deeds will contain a clause to exclude a settlor of course.

 

In the past wasnt it common to get the receptionst or assistant of the lawyer to be the settlor?

 

Dont mean to give unqualified legal advice but I think its a safe one to call.

The only thing a receptionist or clerical support staff should do is sign as a witness to signatures. A settlor is a legal party to the existence of a trust. ****ing that up is a major risk to the trust and could trigger all sorts of consequences. eg Stamp duty problems, CGT etc. Let alone costly court matters.

And backdating legal documents
Or not signing them
And "do I need to open a trust bank account"
all rank as really stupid things to do.