Property passing to beneficiaries of fixed trusts

Circumstances/Transactions:

A transfer to the beneficiary absolutely of a fixed trust.

For the purpose of s36: 

• A fixed trust is defined as any trust other than:
  • A discretionary trust under s36A.
  • A trust to which a unit trust scheme relates.
  • A superannuation fund under s41A.
• Relevant time means the time at which the property first became subject to the fixed trust.

Evidence:

The following information is required: 

1. The Digital Duties Form.
2. A complete stamped copy of the trust deed with copies of all amending deeds.
3. In relation to any trust for which a stamped copy of the trust deed cannot be produced, please provide the following: 
   • A statutory declaration declaring what steps have been taken to locate the original trust deed, made by a person having knowledge of those steps. If an unstamped copy of the trust deed is available, you are required to attach a copy and explain how it was obtained.
   • Copies of financial statements and income tax returns of the trust for the last three financial years, showing the property was an asset of the trust.
   • Any other material showing that the property as an asset of the trust, for example:
     • A copy of the contract of sale for the purchase of the property by the trustee (showing capacity as trustee of the trust).
     • If the trustee is a corporation, the minutes of directors’ meetings where it was resolved to accept appointment as trustee of the trust and to acquire the property for the trust.
4. A copy of the historical certificate of title.
5. If the property’s title particulars have changed since the relevant time, provide copies of the parent titles and the plan of subdivision or consolidation showing how the current title particulars were derived from the parent title,.
6. Evidence of the value of all the properties under the trust as at the date of the transfer, by one of the following:
   • A letter of appraisal from a licensed real estate agent and a copy of the relevant rates notice.
   • A valuation by a certified practising valuer who is a member of the API or from a member of the Real Estate Institute of Victoria with sworn valuer accreditation. 
   • In circumstances where a letter of appraisal or sworn valuation could not be obtained, an explanation of the steps taken to obtain either the appraisal or valuation.
7. Copies of the financial statements of the trust for the last three financial years.
8. A statutory declaration by the trustee of the trust, addressing the matters set out below: 

   • State whether the transfer is to the beneficiary absolutely (i.e not as trustee of another trust).

     Capacity of the trustee

   • State whether the trustee has held the property in any other capacity either before or after the relevant time and if so explain in what other capacity they acted
   • Identify the provision of the trust deed under which the trustee has the power to distribute capital to the beneficiaries

   • State whether any prior distributions of property have been made to beneficiaries of the trust and if so identify the assets transferred and to whom

     The relevant time

   • State the date the property first became subject to the trust
   • Identify the provision of the trust deed which shows the transferee was a beneficiary at the relevant time
   • If the transferee is not named as a beneficiary in the trust deed explain how the transferee is considered to be a beneficiary of the trust at the relevant time

Beneficiaries' entitlement

• State the value of the transferee’s entitlement under the trust at the date of transfer.
• Identify and state the value of each asset of the trust at the date of transfer.
• Identify and state the value of all liabilities of the trust at the date of transfer.

Consideration and mortgages

• State whether the transfer is part of a sale or other arrangement under which there exists consideration for the transfer.
• State whether the transferee paid any amount to the transferor or to any other person in respect of the transfer. 
• State whether the trust had borrowed funds from another person other than a financial institution (e.g. beneficiary loan accounts, loans from associates etc). State whether the transfer related to the forgiveness of any such loan. If yes, provide full details of the arrangement together with copies of loan statements before and after forgiveness of the loan.  
• If loan accounts (as referred to in the previous point) exist and the loans are not to be forgiven as part of the transfer, state how the trust intends to pay out the loans.
  State whether the property was encumbered by a mortgage, whether registered or unregistered, immediately before the transfer. If so, provide evidence of the amount owing under that mortgage immediately before and after the transfer (e.g. account statement, letter from the financier).
• State whether the mortgage liability was:
  • assumed by the transferee, or
  • paid out by the transferee with a new mortgage over the property that secures the same or greater amount as that outstanding under the mortgage that existed immediately before the transfer.
• If the mortgage liability was assumed or paid out by the transferee, state the circumstances for the initial mortgage, including: 
  • When the mortgage created, in particular was it at or before the time the property became subject to the trust. 
  • Whether the mortgage was part of a refinancing of an earlier mortgage. If yes, provide details about when the earlier mortgage was created. 
  • Whether the mortgage was created to secure borrowings that have been applied to the improvement of the property. If yes, provide documentary evidence to support this.
  • Whether the mortgage was obtained in connection with matters unrelated to the property. If yes, please set out what these other matters are. 
• If the mortgage liability was not assumed or paid out in full by the transferee, explain how the mortgage liability was reduced or discharged and provide evidence of the source of funds (e.g. bank/financial statements).