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Budget Update Notice: The 2026/27 Federal Budget contains proposals that may affect the information in this article. As at the date of this notice, these are proposed measures and have not yet passed into law. We are reviewing and updating our content as the legislative process progresses. If you are making a decision based on any of the matters discussed here, please contact us for advice that reflects the current and proposed position.
Below is Chapter 3 of our ‘Controlling a Family Trust When You Die’ booklet. To read the other chapters of our booklet, click the links below:
- Chapter 1 – Who controls your family trust?
- Chapter 2 – How do you give ‘fixed percentages’ to your children?
- Chapter 4 – Putting in place a ‘control structure’
Distributing assets from the trust on your death
One simple solution would be to exercise your control over the trust’s assets before you die to require the trustee to distribute a fixed interest in the trust assets to your children following your death.
Distributing the assets to your children will trigger a ‘disposal’ of those assets by the trust to your children, and this is likely to have significant tax consequences. In particular, it is likely to trigger potential (and likely significant) income tax and capital gains tax on the trust’s assets. There may also be stamp duty consequences. Depending on how this is done, you could actually trigger the adverse tax consequences when you are still alive, i.e. now, rather than when you die.
Furthermore, the assets will no longer benefit from being held in the trust.
In short, unless you want to bring the trust to an end when you die, pay any accrued tax, and distribute the actual assets to your family, then this is not a practical strategy.
The information contained in this post is current at the date of editing – 3 April 2024.
