Partner Christine Fleer says comments made by the Prime Minister over the weekend suggest that he fundamentally misunderstands the reasons for using discretionary rather than fixed trusts for inheritances.
Featured in the AFR, both in a news article and opinion piece, Christine explains that the fixed trust alternative put forward by the government is not appropriate for inheritance planning because it locks in entitlements in predetermined proportions to beneficiaries.
“A fixed trust cannot sensibly accommodate the possibility of future grandchildren,” she said. “It cannot easily respond where one child later becomes financially secure while another experiences hardship. It cannot adapt to changes in tax residency, disability, illness, family breakdown, or the vastly different needs that may emerge among beneficiaries over time.
“The flexibility characterised as some kind of aggressive tax is, in reality, the mechanism that allows wills to function sensibly across generations of Australians living in the real world. If families are effectively required to incur punitive tax rates merely to preserve flexibility and protection for inherited assets, many Australians will understandably question whether the government is reintroducing a form of inheritance tax in substance, even if not in name.”
To read Christine’s opinion article, click here.
To read the news article, click here.
