In this episode of It Depends, associate Sacha Robinson explains how to choose the right jurisdiction for your trust. While it is usually best to use the law of the state where the trust deed is signed, other factors such as where the trust is managed and where assets and trustees are located are also important. Recent changes to Queensland legislation, which allow trusts to run for 125 years, have led some to consider Queensland jurisdiction even in the absence of genuine connections. However, this choice may carry unexpected risks.
Video transcript
Welcome to the latest edition of It Depends. Today, we will be talking about what the jurisdiction or governing law of your or your client’s trusts should be.
What should the jurisdiction of my trust be?
It depends. Generally for our CGW Structures deeds, we recommend that the law that should apply to a trust is the state in which the trust deed is signed. However, this is not the only consideration when determining what the governing law of the trust should be.
What are the other considerations when determining the jurisdiction of a trust?
Courts will consider the following factors when determining what law should apply to a trust: The place of administration of the trust. The place where the assets of the trust are situated. The place of residence or business of the trustees and the objects and purposes of the trust and where they are to be fulfilled.
Can I choose a jurisdiction a trust has no connection to?
Queensland has recently changed the length of time that a trust can run for in Queensland up to 125 years, instead of the 80 years that applies in other places.
This means we have had a few inquiries about whether the jurisdiction of a trust can be Queensland to extend its life, even if it has no connection to Queensland.
One of the biggest risks with putting Queensland as the jurisdiction for your trust where your trust actually has no connection to Queensland, is that a court at a later date may decide that the jurisdiction of your trust is another state and your trust may have already vested completely inadvertently.
In that circumstance, the trust is no longer a discretionary trust and is instead a fixed trust with the default capital beneficiaries having the fixed entitlements.
What should I do next?
Please contact me or a member of our team if you would like to discuss what the jurisdiction or governing law of your or your client’s trusts may be. Thank you for watching this edition of It depends.
