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Buy units in a unit trust

We will help you buy into a unit trust knowing exactly what the deed gives you and what it does not.

Buying units in a unit trust is not like buying shares in a company. There is no general statute sitting behind you and no standard set of rights. The trust deed is the whole picture. It decides what you can vote on and what you are entitled to see. It also decides whether the trustee can redeem your units, and whether you can sell them at all. Deeds vary enormously, and a short one is not a simple one. We read the deed before you commit.

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The deed in plain terms

You are told what the units entitle you to before you pay for them.

Duty priced in, not discovered

The duty position is confirmed while the price can still be adjusted for it.

A route out of the trust

Transfer and redemption terms are checked, so you know how you would ever sell.

What does it mean to own units in a unit trust?

A unit trust divides the beneficial interest in trust property into units. Holding units gives you a fixed proportional entitlement to income and to capital. That is what makes a unit trust different from a discretionary family trust.

What the units actually entitle you to comes from the trust deed and nowhere else. The deed sets out voting rights, information rights and how distributions are made. It also says whether the trustee can issue or redeem units, and what has to happen before a unit can be transferred. Two unit trusts holding identical assets can leave their unitholders in very different positions. That is why a unit acquisition starts with reading the deed, not with agreeing a price.

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What rights do I have as a unitholder?

Whatever the trust deed gives you. Typically a fixed entitlement to income and capital in proportion to your units, and some voting and information rights. Unlike a company shareholder, you have no general statutory safety net, so the deed is the document that matters.

Can the existing unitholders stop me buying?

Possibly. Many deeds require units to be offered to existing unitholders before an outside sale, and many give the trustee a discretion to refuse a transfer. Both have to be checked before you commit, because a transfer made in breach of the deed may be ineffective.

What should due diligence cover?

The deed and any unitholders agreement first. Then the trust’s assets and liabilities, any guarantees or security the trustee has given, the distribution history, and the tax position. It is also worth confirming that the trustee has been validly appointed.

Is duty payable when I acquire units?

Often, and it varies by state. Where the trust holds land, duty can be charged on the transfer of units, sometimes at the rate that would apply to the underlying property. It is worth confirming before the price is agreed rather than after.

The deed decides what your units are worth

Send us the trust deed and any unitholders agreement. We will tell you what the units entitle you to, what the trustee can do without asking you, and what would need to change.

Your rights as a unitholder are whatever the deed says they are

You have agreed a price for the units. What you have not confirmed is whether the transfer can even proceed. Existing unitholders may have to be offered them first, and the trustee may have a discretion to refuse the transfer entirely.

You also do not know yet what the units give you. Information, voting, a share of distributions and a way out are all deed questions. A deed drafted for the original unitholders was not drafted with you in mind.

We will review the trust deed and advise on the rights the units carry.
We will confirm whether trustee consent or a right of first refusal applies to the transfer.
We will run due diligence on the trust's assets, liabilities and guarantees.
We will advise on the duty payable before the price is settled.
We will prepare the unit transfer documents and any unitholders agreement you need.

You are buying into a trust you did not set up

The trust holds a property, or a business, or an investment portfolio, and somebody is selling their units in it. You have seen the financial statements and the price looks fair. What you have not seen is the deed, or the unitholders agreement if there is one. You are about to take a position in a structure that somebody else controls, on terms written before you were part of it.

What's included in your unit trust acquisition service

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Trust deed and unitholders agreement review.
Advice on voting, information, distribution and exit rights.
Due diligence on trust assets, liabilities and guarantees.
Stamp duty advice and structuring.
Unit transfer agreement preparation and negotiation.
Completion and unit register update.

What buyers of units discover too late

The problems in unit trust acquisitions are almost always in the deed, and they only appear when something happens. A deed with no obligation to distribute income lets the trustee retain profits indefinitely, and a minority unitholder can do nothing about it. A trustee controlled by the other unitholders can issue new units and dilute you.

Exit is the recurring one. Many deeds let the trustee refuse a transfer without giving a reason, which means you can be locked in with no market for your units. Duty is the other. Transfers of units in a trust that holds land can attract duty at rates that make a marginal deal uneconomic. Finding that out after signing is expensive. Meanwhile the trust’s own liabilities, including any loan the trustee has guaranteed, sit behind the units you are buying.

How we make sure you know what you are buying

The deed comes first. We read it and tell you in plain terms what the units give you. What you can vote on, what you are entitled to see, how distributions must be made, and whether you can ever sell. We also confirm whether the transfer needs trustee consent or has to be offered to existing unitholders first.

Then we look at the trust itself. Its assets, its liabilities, any guarantees the trustee has given, and its history of distributions. We advise on duty before the price is settled, because in some states it changes the economics. Where the deed leaves an incoming unitholder exposed, we negotiate a unitholders agreement or a deed amendment as a condition of the purchase. You complete knowing what you own and how you would get out of it.

How the units get bought

You know what the deed gives you before the money moves.

Read the deed

We review the trust deed and any unitholders agreement, and tell you what the units actually entitle you to.

Check the trust

We look at assets, liabilities, guarantees and distribution history, and confirm the duty position before the price is settled.

Fix the terms

We negotiate any deed amendment or unitholders agreement you need, then document and complete the transfer.

Lawyers who read the trust deed before you agree the price

Most people buying units have looked at the asset and the numbers and assumed the legal position is standard. It is the reasonable assumption and it is wrong. The deed is a private document that can say almost anything. Nobody involved in the sale has any reason to point out the parts that do not suit you.

We act for incoming unitholders in property trusts, business trusts and investment structures. We have seen deeds that allow the trustee to redeem units at cost, and deeds with no obligation to distribute income at all. We will tell you which provisions in yours are ordinary and which ones should change before you buy.

Our great lawyer guarantee

Six principles we hold to, whatever you bring us and however long it takes.

Take the time

We listen carefully to understand what you want to achieve, then step you through the advice and the documents.

Share our knowledge

We pass on as much as we can, so you can make your own informed decisions.

Stick to our knitting

We only do what we are good at, so you never pay for our learning.

Work as one team

Someone is always available to answer your question or point you the right way.

Fair pricing

A fixed or capped quote for advice and documents, so you do not carry the price risk.

It is your show

We are in it for a front row seat to witness your success, not for our egos.

Buy the units knowing what they carry

Send us the trust deed and the financial statements. We will tell you what the units entitle you to, what duty is payable, and what needs to change before you buy them.

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