Latest News [index] Variations of trust
Although discretionary trusts routinely last for up to 80 years, any trust period is possible. Subject to the nature of a trust's assets, or in some cases, the trust's beneficiaries, it can become necessary to review the end date of a trust with a view to whether this date can be extended. A common situation where this occurs is where a trust holds assets such as forestry assets where a tax liability will arise on the end of the trust even though the trust's assets cannot be economically realised. Where this is the case it can be desirable to extend the trust period. However, in doing so, whether the extension of the trust period is done by order of the High Court or by other valid means, it is important to consider whether such a variation could be construed as tax avoidance.
This possibility has been the subject of a recent High Court decision where, without deciding the question, the Court determined that it was appropriate to agree to such a variation on behalf of the minor and unborn beneficiaries.
The Court's reasons in this case included a consideration of the tax advantage that accrued to the minor beneficiaries in allowing the variation of vesting date balanced against a perception of an (implied) lack of significant risk.
If you have any questions about the variation of trusts please contact a member of the Ayres Legal team.