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Trusts law needs to suit modern families

QLS representatives Jessica Lipsett, Karen Gaston and Sonia Smith at the hearing at Parliament House yesterday.

Queensland Law Society expressed its views on proposed changes to the Trusts Act 1973 (Qld), at Parliament House yesterday.

At the public hearing before the Housing, Big Build and Manufacturing Committee (HBBMC), QLS was represented by Legal Policy Special Counsel Sonia Smith; Barrister Karen Gaston, of the Society’s Succession Law Committee; and charity lawyer Jessica Lipsett, of the Society’s Not For Profit Law Committee.

The trio spoke to the Society’s Trusts Bill 2024 submission, which supported the Bill’s objectives of modernising and simplifying the Act, but drew particular attention to the “minimum trustee” requirement.

QLS suggested the requirement at Clause 27 be amended to one trustee from two, unless otherwise required by the instrument.

Sonia said the appointment of one individual rather than two would reflect modern family structures.

“Our members are often approached by individuals such as sole parents who may have been divorced or widowed who wish to set up a trust for their children or remove a partner as trustee,” she said.

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“It would be artificial to require a sole parent to appoint a second person as trustee or set up a company to act as trustee for the management of their financial affairs.”

Karen, who has practised in succession law for more than 20 years, also said the required appointment of two trustees could be problematic, with conflicts among children one possible result.

“I think the real issue is finding a second person, so in an example where you’ve had a spouse pass away, or you’ve separated and you are now the person who has control of a trust, you have to now find a second trustee – who is that going to be?” she said.

“There are some things that then start to emerge that fall into a dispute space … really a trustee is the gatekeeper of a trust and it’s very hard sometimes to find the right person for that role that then doesn’t end with a number of disputes.”

The Society supported the move to limiting the number of trustees to four but suggested the Attorney-General and the Supreme Court have the power to appoint additional trustees where appropriate.

Jessica spoke to the proposed changes to Part 13 of the Act, in relation to issues arising from changes to the Commonwealth deductible gift recipient framework.

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She said QLS recommended the changes to this part of the Act be both retrospective and prospective, to ensure ancillary funds and charitable trusts were not penalised for inadvertent breaches, saying “the transitional provisions in the Bill are only part of the solution”.

“An additional section is needed to maintain the validity of contributions by certain ancillary funds after this Bill is passed,” she said.

The HBBMC is due to table its report on August 2, 2024.

Read the QLS submission here.

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