1.1.T.180 Trust

Usage

This definition applies to all payments.

Definition

A trust is an arrangement in which a settler transfers property to one or more trustees, who hold it for the benefit of one or more persons who are entitled to enforce the trust, if necessary by action in court.

Categories of trusts

There are 2 categories of trusts:

  • statutory trusts, and
  • non-statutory trusts.

Statutory trusts

Statutory trusts are:

  • created by law,
  • usually established to look after the affairs of an income support recipient who is incapable, or legally unable to attend to their own affairs, and
  • exist if property is held by:
    • public trustees,
    • Workers Compensation Boards, and
    • courts.

Explanation: Although the description of 'statutory trust' is applied, a trust in the strictest sense is NOT created. The Federal Court in Flannery V Secretary of the Department of Social Security has recognised that public trustees and similar bodies are MANAGERS rather than trustees of property.

Non-statutory trusts

The following table lists the different types of non-statutory trusts.

If a trust… Then it is…

is established with a written trust deed,

Explanation: Trust deeds do NOT vary the property rights of the parties to the trust until they come into effect.

  • an express trust, or
  • a declared trust.

Example: Family trusts.

does NOT have a trust deed, but a court decides that it exists,
  • a constructive trust,
  • a resulting trust, or
  • an implied trust.

Trust deed

The majority of non-statutory trusts are expressed in a trust deed which contains the:

  • identity of the trustee/s,
  • identity of the beneficiaries, and
  • nature of the trust.

Explanation: Non-statutory trusts can be discretionary (1.1.D.200) or non-discretionary (1.1.N.100) in the way they distribute their income and assets. A trust may be discretionary in the distribution of its income and non-discretionary in the distribution of its assets, and vice versa.

Policy reference: SS Guide 4.12 Means Test Treatment of Private Trusts & Private Companies from 01/01/2002

Last reviewed: 20 March 2017