Release of Unpaid Trust Entitlement

This document allows for the beneficiary of a trust who has an unpaid trust entitlement to release the Trustee from his obligations.

The document includes the requirements as expressed by the High Court in the case of Crichton v Crichton (1930) for an effective release of the Trustee’s obligations relating to a trust.

The document is suitable where, upon release of the Trustee’s obligations, you wish the unpaid trust entitlement to be then held by the Trustee on trust for the beneficiaries of the discretionary/family trust.

This document is not suitable where:

1. the beneficiary wishes for the unpaid trust entitlement to be assigned to a particular individual or entity; or
2. the unpaid trust entitlement has been previously converted into a loan as between the Beneficiary (as a Creditor) and the Trustee (as a Debtor) - use Forgiveness of Debt.

Warning

Releasing an unpaid trust entitlement can have certain tax and stamp duty/transfer duty ramifications. In particular CGT Event C2 applies where the unpaid trust entitlement is released, cancelled, discharged or surrendered. You can purchase (free for Platinum Members) our White Paper on the tax effects of debt forgiveness/release of unpaid trust entitlement here. It is important that advice is sought from a lawyer or accountant on this matter before using this document.

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Trustee Details
• TD 2015/20
• Beneficiaries forgiving Family Trust loan account?
• How do I write the name of company?
• What is an ACN?
• Which address do I enter?
• Does a lawyer check what I am doing?
• What if there are 2 trustees?
• Warning Tax and Stamp Duty/Transfer Duty Consequences
Beneficiary Details
• Beneficiaries forgiving Family Trust loan account?
• Is the beneficiary a trust?
• What is an ACN?
• How do I write the name of company?
• Which address do I enter?
• What if there are 2 beneficiaries?
• Warning Tax and Stamp Duty/Transfer Duty Consequences

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Trustee Details

• TD 2015/20

  Clauses 2 and 3 of this document have some similarities to example 1 as set out in TD 2015/20.
  
  Section 190 C of the Income Tax Assessment Act 1936 (Cth) applied under that particular example.

  This hint is provided by Law Central Legal.

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• Beneficiaries forgiving Family Trust loan account?

  This document allows for a beneficiary to release a trustee from his obligations relating to an unpaid trust entitlement.
  
  This document is not suitable for forgiving a beneficiary loan account when that item is clearly and correctly recorded as a loan in the trust books.
  
  The financial accounts of the trust should have recorded this item as an unpaid trust entitlement as opposed to a loan.
  
  Should you wish to deal with forgiving a beneficiary loan account, we recommend you look at our Forgiveness of Debt.
  

  This hint is provided by Law Central Legal.

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• How do I write the name of company?

  You write the name of your company exactly as it appears on your Company registration from when you first registered with ASIC.
  
  E.g. Manley Proprietary Ltd
  
  Correct way is: Manley Proprietary Ltd
  
  Incorrect: Manley Pty Limited
  or Manley Proprietary Limited
  or Manley Pty Ltd
  

  This hint is provided by Law Central Legal.

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• What is an ACN?

  "ACN" stands for Australian Company Number. It is a unique number given to every registered Australian company. You can find the "ACN" of your company on the Certificate of Registration you received from ASIC when you first registered your company.
  
  The ACN of a company usually has nine digits.
  
  This is an example of an ACN: ACN 999 250 250.
  

  This hint is provided by Law Central Legal.

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• Which address do I enter?

  Enter the residential or physical address of the trustee. i.e. The number and street.
  
  Do not use the postal address.
  

  This hint is provided by Law Central Legal.

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• Does a lawyer check what I am doing?

  No. There are no lawyers at lawcentral.com.au. Law Central does not give legal advice. It is only a website that lawyers put documents onto.

  This hint is provided by Law Central Legal.

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• What if there are 2 trustees?

  This document only caters for one trustee and one beneficiary.
  
  If you have multiple parties, please contact us at support@lawcentral.com.au.
  

  This hint is provided by Law Central Legal.

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• Warning Tax and Stamp Duty/Transfer Duty Consequences

  When entering into this Deed there may be tax and stamp duty/transfer duty consequences.
  
  We recommend that you obtain advice from a lawyer or accountant on the tax and stamp duty/transfer duty consequences before using this document.

  This hint is provided by Law Central Legal.

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Beneficiary Details

• Beneficiaries forgiving Family Trust loan account?

  This document allows for a beneficiary to release a trustee from his obligations relating to an unpaid trust entitlement.
  
  This document is not suitable for forgiving a beneficiary loan account when that item is clearly and correctly recorded as a loan in the trust books.
  
  The financial accounts of the trust should have recorded this item as an unpaid trust entitlement as opposed to a loan.
  
  Should you wish to deal with forgiving a beneficiary loan account, we recommend you look at our Forgiveness of Debt.
  

  This hint is provided by Law Central Legal.

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• Is the beneficiary a trust?

  If the beneficiary is a trust then you need to put in the details of the trustee:
  
  For a single human trustee-
  1. click on human
  2. First Name: Fred
  Middle Name: James
  Last Name: Smith
  Capacity: as trustee for the Smith Family Trust
  
  For a company as trustee-
  1. click on company
  2. Company Name: ABC Pty Ltd
  ACN: 123 123 123
  Capacity: as trustee for the ABC Family Trust

  This hint is provided by Law Central Legal.

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• What is an ACN?

  "ACN" stands for Australian Company Number. It is a unique number given to every registered Australian company. You can find the "ACN" of your company on the Certificate of Registration you received from ASIC when you first registered your company.
  
  The ACN of a company usually has nine digits.
  
  This is an example of an ACN: ACN 999 250 250.
  

  This hint is provided by Law Central Legal.

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• How do I write the name of company?

  You write the name of your company exactly as it appears on your Company registration from when you first registered with ASIC.
  
  E.g. Manley Proprietary Ltd
  
  Correct way is: Manley Proprietary Ltd
  
  Incorrect: Manley Pty Limited
  or Manley Proprietary Limited
  or Manley Pty Ltd
  

  This hint is provided by Law Central Legal.

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• Which address do I enter?

  Enter the residential or physical address of the beneficiary. i.e. The number and street.
  
  Do not enter the postal address.

  This hint is provided by Law Central Legal.

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• What if there are 2 beneficiaries?

  This document only caters for one trustee and one beneficiary.
  
  If you have multiple parties, please contact us at support@lawcentral.com.au.
  

  This hint is provided by Law Central Legal.

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• Warning Tax and Stamp Duty/Transfer Duty Consequences

  When entering into this Deed there may be tax and stamp duty/transfer duty consequences.
  
  We recommend that you obtain advice from a lawyer or accountant on the tax and stamp duty/transfer duty consequences before using this document.

  This hint is provided by Law Central Legal.

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This document has been prepared by the law practice Law Central Legal