Changing the trustee of your family trust can trigger a range of issues – so many, in fact, that partner Scott Hay-Bartlem has produced a series of six ‘It Depends’ videos to cover the tricks and traps for advisers and their clients.
In the sixth and final video in the series, Scott talks about the stamp duty implications of changing the trustee of your family trust.
Welcome to this edition of It depends, which is one in our series of ‘Should I change the trustee of my family trust?’
Should I change the trustee of my family trust?
It depends. So, in this edition, I’m talking about the stamp duty implications of changing trustees.
Is there stamp duty if I change a trustee of my family trust?
Well, two, it depends. So, when you change the trustee of your family trust, you’re actually moving all the assets of that trust from the old trustee to the new trustee. And for stamp duty purposes, that’s actually a transfer and can trigger duty issues.
Are there exemptions?
So, different states have different rules around this. So, it’s really important before you change a trustee, have a look at what the rules are in your particular state and what the particular preconditions are. In New South Wales, for example, if the trustee or any former trustees can benefit from that family trust, you’ve got duty payable on the change of trustee. So, it’s always important to make sure that your trust deed excludes trustees if you’ve got assets in New South Wales. In Queensland, there’s a discretionary exemption where usually you will get it if the same people control the trust before and after, it’s not part of an arrangement giving a beneficiary a benefit. Again, some extra documents you need to do and extra things you need to make sure of before you actually sign those documents.
Does it matter what the assets of the family trusts are?
So, duty is only ever payable if there is ‘dutiable property’ in the trust. If there’s no ‘dutiable property’, then there will be no duty on anything, including a change of trustee. So, again, the rules vary from state to state. In most states, cash in a bank account won’t trigger duty. Things like real estate, shares in unlisted companies, particularly companies that are landholder, business assets such as goodwill, trading stock, sometimes plant and equipment. Those are the kind of things that are dutiable property and are likely to have stamp duty issues if we’re changing a trustee. So, as well as working through where you are, what exemption might apply, the question is what assets do you have in the trust that might be dutiable property?
So, this is just one of a number of factors to consider when thinking about changing the trustee of your family trust. There are a number of other ‘It depends’ covering off some other aspects. Thanks for watching this edition of It depends.