Discretionary (Family) Trust

Newsflash — Bamford's case and the Cleardocs Discretionary Trust

The decision of the High Court in Bamford's case in March 2010 confirmed the approach taken by the Full Federal Court, and the approach taken in the Cleardocs trust deeds, in relation to the definition of income in trust deeds.

The Cleardocs trust deed has contained an appropriate definition of "income" (as defined by the High Court), and the specific power for trustees to determine whether to adopt an alternative definition of income in respect of a year of income by signing a minute to that effect (or taking some other action) since 13 December 2004.

Since the Cleardocs trust deed was launched in 2002, it has contained a specific power for the trustee to determine whether receipts are to be treated as on capital or income account.

More information on Bamford's case

All Cleardocs trust deeds established after the dates mentioned above avoid the issues raised in Bamford's case. If you would like to read more about the case, please see our previous ClearLaw articles:

• Definition of "income" in a trust deed prevails — Bamford's case approach confirmed by the High Court: http://www.cleardocs.com/clearlaw/trusts/bamford-confirmed.html
• The definition of 'trust income': the trust deed prevails: http://www.cleardocs.com/clearlaw/trusts/trust-income-definition.html

Discretionary (Family) Trust — Setting up a family trust fund

You can create all the documents you need to set up a Discretionary Trust (often commonly known as a Family Trust). You can choose whether the trustee is to be a corporation or individuals. You should get legal advice about this. We cannot give that advice.

What's included in the Discretionary (Family) Trust document package?

The Discretionary (Family) Trust document package includes:

• Consent to act as the Trustees (and related minutes if trustee is a company)
• the Trust Deed
• an Establishment Kit telling you what to do next.

The whole process of setting up a Discretionary Trust takes about 5-10 minutes. Once you've answered the questions on the Cleardocs system and paid you can instantly download the documents.

All documents are signed-off by our lawyers at Maddocks.

What information do you need to order a Discretionary Trust from Cleardocs?

You can download our checklist of the information required to order a Discretionary Trust here.

The Discretionary Trust structure

The Cleardocs discretionary trust is a trust under which the trust's trustee or trustees may distribute trust income or other trust property:

• among the beneficiaries named in the schedule to the trust deed, or
• to any one or more people who fit within the description of the general class of beneficiaries which is also set out in the schedule.

The distributions of trust income or other trust property may be made to any number of these eligible beneficiaries and in any proportion at the trustees' complete discretion.

If you require a trust in which the beneficiaries have a fixed interest in the income or other trust property, or where the class of eligible beneficiaries is restricted (say, to only blood relatives of the named beneficiaries), then you must seek legal advice. Please contact us so we may refer you to Maddocks who can provide you with a free estimate of fees for drafting a deed to suit your needs.

Cleardocs also has available a hybrid trust deed and a unit trust deed. To find out more, go to this page then click on the relevant button.

Other types of trust from Cleardocs

Cleardocs also has these types of trust available:

• a Unit Trust — fixed
• a Unit Trust — non-fixed
• a Hybrid Trust

Questions or further information

If you have questions:

• about how to use Cleardocs, contact the Cleardocs helpline on 1300 307 343.
• about legal issues, contact the Cleardocs helpline on 1300 307 343. If you need advice, we will arrange for you to speak with a lawyer at Maddocks. The firm provides a free legal helpline in relation to the documents Cleardocs provides. If you require other legal advice in relation to your particular circumstances, then this will be charged for.