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The legal information and commentary on this site is general only. Documents ordered
through Cleardocs affect the user‘s legal rights and liabilities. To assess their
suitability for the user, legal, accounting and financial advice must be obtained.
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Does the Cleardocs Hybrid Trust have different classes of units?No, there is only one class or type of unit. (However, in certain circumstances, the trustee can make distributions that are not in proportion to the number of units the unit holders own, see here.) Each unit attracts the same rights. However, the class of people who may benefit by virtue of their relationship with a unit holder will vary depending on whether the unit holder is:
Can additional units in a Cleardocs Hybrid Trust be issued in the future?Yes, units may be issued in the future. This is the flexibility that a hybrid trust provides. Further units may be issued, and units may be sold or redeemed. The deed sets out:
Can the unit holders negatively gear their investment in a Cleardocs Hybrid Trust?No, the Cleardocs Hybrid Trust deed does not allow negative gearing by unit-holders in respect of funds borrowed to purchase those units -however, the trust may be able to borrow in its own right and to claim a deduction for interest costs against its own income. The reason the trust does not allow negative gearing is because the trustee has a discretion to distribute income:
These features mean that it is unlikely you can claim a deduction for expenses associated with owning units in the Trust. Can a trust own units in a Cleardocs Hybrid trust?No (but see next 2 questions). A trust cannot own units in a hybrid trust because the law says a trust is not a separate legal person. For example, the 'John Smith Family Trust' cannot own units or any other property. Even so, the trustee of a trust, in his, her or its capacity as trustee, is capable of owning units and other property - see next question. Can a trustee own units in a Cleardocs Hybrid trust?Yes, a trustee can own units in a hybrid trust - as long as you include the trustee's name and their capacity. For example:
'John Smith in his capacity as the trustee of the John Smith Family Trust'.
In this case, the trustee holds the units in the hybrid trust on trust for the beneficiaries of the trustee's own trust. (The trust itself cannot own units as it is not a legal entity.). Can a corporate trustee own units in a Cleardocs hybrid trust?Yes a corporate trustee can own units in a hybrid trust - as long as you include the trustee's name and their capacity. For example:
'ABC Pty Ltd in its capacity as the trustee of the ABC Family Trust'.
In this case, the trustee holds the units in the hybrid trust on trust for the beneficiaries of the trustee's own trust. (The trust itself cannot own units as it is not a legal entity.). Can a trustee of a Cleardocs Hybrid Trust also be a unit holder in another trust?Yes. A trustee of a Cleardocs Hybrid Trust can be a unit holder either in his, her or its own right or as the trustee of another trust. What do I do if my bank won't give me finance because "the trust deed doesnt allow it"?If a bank says it wont give you finance because the trust deed wont allow it, there are 3 steps you can take:
Most issues of this nature can be adequately and promptly addressed in this way. What do I do if my bank won't give me finance because "the trust deed doesnt allow it"?If I change from an individual trustee to a corporate trustee (or vice-a-versa) does the Deed require amending? No, the trustee can change from individual trustee to a corporate trustee (or vice-a-versa) without the deed being amended. However, you will require a resignation from the retiring individual and consent to act as trustee from the company. Does a Cleardocs trust give me asset protection?A trust can play an important role in an asset protection strategy. However, if you are concerned about asset protection, then you should seek legal advice concerning your own circumstances. When should the trustee apply for an ABN for the trust?ABNs are not compulsory. However, there are many good reasons to have one. For example, ABNs help:
Also, you need an ABN to register for GST. Entities carrying on an enterprise in Australia with a GST turnover of $75,000 must register for GST. More information can be found at www.abr.gov.au. Will the trust be entitled to an ABN?A trust must meet either one of the following 2 criteria to be eligible for an ABN: Criterion 1 The entity is any one of:
Criterion 2 The entity can answer 'Yes' to each of the following statements:
To set up on Cleardocs, all you need to do is key in your name, industry, email and password. Then you're ready to create Cleardocs documents. It only takes a few minutes. (There's no joining fee. Just a pay per use document fee.) Existing users wanting to start a new document, log in (top right) |
