The decision in Sybmore Holdings relates to an application to the NSW Supreme Court to amend the terms of a deed of a family trust that was established in 1978. (The application was made under sec 81 of the NSW Trustee Act.) For reasons that are unclear, the trust's vesting date was not the usual 80 years from commencement — which would have been 2058. Instead, the vesting date was nominated as 23 December 2007. This meant that by that date the trust would have to be distributed and the trust wound up.
As the assets of the trust included property with accrued capital gains, any vesting in December 2007 would have included:
When a court is deciding whether to amend a trust deed, one of the difficulties is considering how the amendment will affect the interests of potential beneficiaries. In this case, the Court held that the law was broad enough to enable the Court to change the vesting date even though this would alter these beneficial interests.
Although this is a NSW case, it may be relevant in other states whee the law is similar (but not exactly the same), for example:
The beneficiaries and trustees of trusts with a vesting date of less than the statutory limit of 80 years may wish to consider applying to the Court to extend the vesting date.
More broadly, the decision suggests that the Court may agree to an amendment of a trust if the amendment advances the objectives of the trust and even if the amendment alters beneficial interests.
If you or your clients have a trust deed that has a premature vesting date, then you may wish to consider whether there are any benefits in making a similar application to have the vesting date extended.
Maddocks' Private Client and Tax and Revenue teams can advise you and your clients on all aspects of family trust structures. Please contact Teresa Catalano or Julian Smith with any questions on 03 9288 0555.
Julian Smith is a partner in the Maddocks Commercial team.
Julian advises extensively in the following areas:
Julian advises clients ranging from public companies servicing the wholesale financial services market to high net worth individuals and their advisers.
Julian has been with Maddocks since undertaking articles in 2001.
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