You are here

Other Trust Matters pre 01/01/2002

Document
Trusts - constructive, resulting, secret or implied

A court may decide that a trust exists due to the conduct of the relevant parties, although no action has been taken to declare a trust in writing.

Example: These trusts include:

  • constructive trusts,
  • resulting trusts,
  • secret trusts, and
  • implied trusts.
Assessment of constructive, resulting, secret or implied trusts

    

If one of these trusts exists, determine the role of the person in the trust and assess the trust income and assets according to that role. The following table outlines the 2 roles that a person may play in these trusts and how to assess them.

Role

Assessment

Trustee

Although the legal owner of assets, they do not have beneficial ownership, therefore no asset is assessable. Deprivation provisions may apply.    

More ?

Deprivation of Income and Assets

Chapter 9.6

More ? (go back)

Beneficial owner

Assessment is based on the person's share of the beneficial ownership of the assets.

Ownership of assets held in trust for others

Any asset held in trust by a person for any other person or child, cannot be regarded as the person's asset. Assets held in trust for children are not treated differently to assets held for any other person. Ownership of the asset belongs to the beneficial owner, not the trustee.

Bank account in trust - assessment of income and assets

A person can establish a trust by opening a bank account as trustee for another person. For example a bank account could be opened on behalf of a child or any other person. The following table describes assessment of bank accounts held in trust.

If a person...

Then...

transfers money to a trust account

it is the property of the beneficiary(s), along with interest credited to the account. The deprivation of income and assets provisions may apply.

as trustee of the account, is using the account for personal benefit

the balance of the account is assessed as the trustee's asset, and is subject to deeming. In these cases it cannot be accepted that a trust has been created.

The person is legally obliged in the same way as other trustees to use the trust's assets for the benefit of the beneficiary(s).

Person loans assets to a trust

A person who loans assets to a trust retains ownership of the assets, which are assessed in the same way as other amounts on loan. The loan will be reflected as a liability in the trust's balance sheet.

Gifting of assets to a trust

Disposal of assets may have occurred if a person gifts assets to a trust within 5 years of becoming qualified to receive a pension. The disposal may be subject to deeming.


Trustee has two meanings depending on the context, (i) and (ii).

(i) a person who looks after someone else's affairs

According to section 202 of the VEA, a trustee is a person appointed by the Commission to administer the financial affairs of a pensioner who may be incapable of managing their own affairs for reasons such as:

  • age,
  • infirmity,
  • ill health, or
  • improvidence.

These criteria include circumstances where a pensioner has a psychiatric disorder or a mental illness as a result of alcohol or drug addiction.

A trustee can be appointed, with or without the consent of the pensioner and once appointed, a trustee has full control of the pension payment.

(ii) a person responsible for administration of a trust

According to section 52ZO of the VEA, trustee has the same meaning as in the Income Tax Assessment Act 1997.