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Maddocks 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.
Resources » Frequently asked legal questions » Unit Trust

Can a trust own units in a Cleardocs unit trust?

No (but see next 2 questions). A trust cannot own units in a unit 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.

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Can a trustee own units in a Cleardocs unit trust?

Yes, a trustee can own units in a unit 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 unit 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.).

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Can a corporate trustee own units in a Cleardocs unit trust?

Yes a corporate trustee can own units in a unit 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 unit 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.)

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Can additional units in a Cleardocs Unit Trust be issued in the future?

Yes, units may be issued in the future. This is the flexibility that a unit trust provides. Further units may be issued, and units may be sold or redeemed.

The deed sets out:

  1. The process for issuing more units or selling or redeeming units; and
  2. How to calculate the price for the relevant units.
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Does a Cleardocs trust give me asset protection?

A trust can play an important role in an asset protection strategy, but unit trusts less so.

However, if you are concerned about asset protection, then you should seek legal advice concerning your own circumstances.

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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, they help:

  1. You to deal with the ATO; and
  2. Help you in dealing with other businesses when supplying goods or services to them, or when purchasing goods and services.

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.

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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:

  1. A company incorporated under the Corporations Act 2001 in Australia;
  2. A charitable institution or trustee of a charitable fund in Australia;
  3. A deductible gift recipient in Australia; or
  4. A religious institution in Australia.

Criterion 2

The entity can answer 'Yes' to each of the following statements:

1. Its activity is carried out in any of:
1.1 the form of a business
1.2 the nature of trade, or
1.3 the form of a regular or continuous grant of a lease, licence or interest in property.
2. Its activity is carried out in Australia or it makes supplies that are connected with Australia.
3. Its activity is not a private recreational pursuit or hobby.
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What do I do if the unit trust deed is lost?

You can't simply replace a unit trust deed because to do so may create a new trust - which has tax and stamp duty implications.

So, if a discretionary trust deed has been lost, then you need to consider the following steps in consultation with a lawyer:

  1. Arrange for all parties to the deed to conduct a thorough search for the deed;
  2. Contact the person (maybe a solicitor or accountant, or their firm) who arranged the deed to see if they have a copy;
  3. Ask the person (maybe a solicitor or accountant, or their firm) who arranged the deed if they have a deed which they arranged around the same time as your lost deed was arranged;
  4. Seek advice from your lawyer as to whether you can use a similar deed to replace the lost Deed; and
  5. If none of the above options are available, then the trustee can approach the relevant state or territory court and apply for directions on how to administer the trust.
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