Setting up a trust
Scenario:
My father passed away last month and left his investment properties to his three children (us) as per the will. However, one of the conditions is that the income from those properties is to be distributed among us and also eight grandchildren for the next 15 years.
Are we able to set up a trust to which income from those properties get transferred so that the trust can distribute the income to the 11 beneficiaries (equal share) for the next 15 years?
Explanation:
Technically, for succession law purposes, your father has already established a trust under his will. It is a fixed trust of the income among the 11 beneficiaries and the capital among the three children. The executors will be the trustees of the trust. From a legal perspective, there is no need to set up a new trust by having a trust deed drawn up and settled. To do so may well trigger CGT and stamp duty. The trust that has been established under the will is a testamentary trust such that for each of the grandchildren, the concessions in s102AG of ITAA 1936 should apply and they should be taxed at adult marginal rated on their fixed proportion of the income.