4.7.3.80 Other Trust Matters pre-01/01/2002
Summary
This topic provides information on the following:
- constructive, resulting, secret or implied trusts,
- assessment of constructive, resulting, secret or implied trusts,
- bank accounts in trust,
- income support recipient loans of assets (1.1.A.290) to trusts, and
- gifting of assets to trusts.
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.
Examples: These trusts include:
- constructive trusts,
- resulting trusts,
- secret trusts, and
- implied trusts.
Assessment of constructive, resulting, secret or implied trusts
Details about assessing the existence of these trusts are found in the Complex Assessment Officers Handbook. If one of these trusts exists, determine the role of the income support recipient in the trust and assess the trust income and assets according to that role. The following table outlines the 2 roles which a recipient 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 (1.1.D.110) provisions may apply. |
| Beneficial owner | Assessment is based on the income support recipient's share of the beneficial ownership of the assets. |
Act reference: SSAct section 8(1)-'income'
Ownership of assets held in trust for others
ANY asset held in trust by an income support recipient for any other person or child, cannot be regarded as the recipient'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 & assets
An income support recipient can establish a trust by opening a bank account as trustee for another recipient.
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.
Explanation: The income support recipient is legally obliged in the same way as other trustees to use the trust's assets for the benefit of the beneficiary/s.
| If an income support recipient… | 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. Explanation: In these cases it CANNOT be accepted that a trust has been created. |
Income support recipient loans assets to a trust
An income support recipient 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.
Policy reference: SS Guide 4.6.5.60 Assessing loans & guarantor arrangements
Gifting of assets to a trust
Disposal of assets MAY have occurred if an income support recipient gifts assets to a trust:
- on or after 1 June 1984 or 19 May 1987 for allowances, AND
- within 5 years of becoming qualified to receive a pension, benefit, or allowances.
The disposal MAY be subject to deeming.