Is it possible for a trustee under a Will in the state of Queensland
Australia, solely by the use of a discretionary power in the Will, to
grant one of the beneficiaries under the Will the 'right under the
Will' rather than merely 'the permission of the trustee' to occupy
trust property? I will pay for a reference that clearly confirms or
denies this proposition. I already have the United Kingdom reference
that confirms the proposition. |
Request for Question Clarification by
justaskscott-ga
on
04 May 2003 18:55 PDT
What is the United Kingdom reference that confirms this proposition?
What is the specific language that confirms it? Perhaps we can find
something like it in Queensland, Australia. (Of course, as noted in
the disclaimer at the bottom of this page, answers and comments on
Google Answers are general information, and are not intended to
substitute for informed professional legal advice.)
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Clarification of Question by
ryllis-ga
on
05 May 2003 00:16 PDT
The UK reference is Taxation of Chargeable Gains Act 1992 Section 225
and Inland Revenue CG65454. The corresponding Australian references
are ATO Legal database IT 2664 and Interpretative Decision 2003/109.
My apologies for not including this information before.
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Section 28 of the Trusts Act of 1973 in Queensland, reads:
28 Power to purchase dwelling house as residence for beneficiary
(1) A trustee may—
(a) purchase a dwelling house for a beneficiary to use as a residence;
or
(b) enter into an agreement or arrangement to secure for a
beneficiary a right to use a dwelling house as a residence.
(2) Despite the terms of the instrument creating the trust, a trustee
may,
if to do so would not unfairly prejudice the interests of other
beneficiaries,
retain as part of the trust property a dwelling house for a
beneficiary to use
as a residence.
(3) A dwelling house purchased, retained or otherwise secured for use
by the beneficiary as a residence may be made available to the
beneficiary
for that purpose on the conditions consistent with the trust and the
extent of
the beneficiary’s interest that the trustee considers appropriate.
(4) The trustee may retain a dwelling house or an interest or rights
in a
dwelling house acquired under this section after the use of the
dwelling
house by the beneficiary has ended.
(5) In this section—
“dwelling house” includes—
(a) a building or part of a building designed, or converted or capable
of being converted, for use as a residence; and
(b) amenities or facilities for use in association with the use of a
dwelling house.
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By my reading of Section 28(b) -- "enter into an agreement or
arrangement to secure for a beneficiary a right to use a dwelling
house as a residence" -- explicitly grants the trustee the authority
to secure a "right to occupy" as you put it, as part of the trustee's
general authority under the will.
Please note that I have several messages from Trust authorities in
Queensland who all stress that the particular terms of the will in
question are the only way to provide an ultimate answer to your
question. However, I believe the above-cited section of law provides
the general guiding principle you were seeking.
I hope this is the information you were seeking but if anything here
is not clear, or requires elaboration, please let me know by posting a
Request for Clarification, and I'll be happy to assist you further.
search strategy: wills trustee Queensland |
Request for Answer Clarification by
ryllis-ga
on
07 May 2003 06:30 PDT
The trustee in this case has discretionary power in the will to permit
occupation. This reference confirms that the trustee would have that
power anyway even if there was no such discretionary power in the
will. However it does not answer the question: does the beneficary
have a 'right under the will' to occupy trust property? It merely
states that the trustee has the power to permit occupation. It does
not confirm or deny the proposition that the beneficiary has a 'right
under the will' to occupy the dwelling.
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Clarification of Answer by
pafalafa-ga
on
07 May 2003 07:01 PDT
Hello ryllis-ga,
Thanks for your clarification. I think with one or two more "back and
forth" exchanges, I'll be able to focus on precisely what you need and
(hopefully) track down the right information. I have two items I'd
appreciate your feedback on:
1). Dealing with legal terms is always tricky business. In your
original question, you asked if a trustee can *grant* a beneficiary
the "right under the will" to occupy trust property. In your
clarification, you ask about something that is (to my mind) quite
different: "the proposition that the beneficiary has a 'right under
the will' to occupy the dwelling". Here you are asking if the
beneficiary has such a right even *without* an explicit grant from the
trustee.
In my original answer, I concentrated on the ability of the trustee to
grant a right under the will. I believe that issue is addressed by
the Section of law I referenced that says "a trustee may...secure for
the beneficiary a *right*" to ocuupy a residence.
Please let me know if the distinction I've made here is clear and
meaningful. If it is, perhaps you can tell me a bit more about the
situation at hand, so I can focus on how to get you the information
you need.
2). I checked the UK and Australia cites you mentioned. It's wasn't
clear to me in those (sometimes) lengthy documents which particular
language addressed your issue. If you could point me to the
appropriate passages in each document, it would be a great help in
finding similar material in Queensland.
Ryllis-ga, please hang in there with me on this one. As I said, it
might take a few exchanges of information between us to get you the
best answer possible. With a bit of patience, we'll get there.
pafalafa-ga
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Request for Answer Clarification by
ryllis-ga
on
07 May 2003 07:32 PDT
The judgement in the UK case in question was as follows:
Private residence relief: settled property: entitled to occupy
The view of Brightman J, in the High Court was expressed in these
terms
`In this case the beneficiaries were in occupation of `Wickwoods'
throughout the relevant period as their only or main residence. They
were in occupation pursuant to the exercise by the trustees of a power
expressly conferred by the settlement to permit those beneficiaries to
go into occupation and remain in occupation. The trustees exercised
that power, and the beneficiaries thereupon became entitled to go into
occupation and to continue in occupation until the permission was
withdrawn. The trustees never did withdraw permission until they
required vacant possession in order to complete the exchange.
Therefore, looking at the matter at the date of the disposal, the
beneficiaries were persons who, in the events which happened, were
entitled to occupy the house and did occupy it under the terms of the
settlement. That, in my view, is the correct approach to the [Section]
in dealing with the type of case which is before me, and in those
circumstances I reach the view that the terms of [Section 225] have
been satisfied and that the gain is exempt from Capital Gains Tax.'
In Sansom v Peay (52TC1) the trustees had a discretionary power
expressed in the following terms.
`Power to permit any beneficiary to reside in any dwelling house or
occupy any property or building which or the proceeds of sale of which
may for the time being be subject to the trusts hereof upon such
conditions as to payment of rents, rates, taxes and other expenses and
outgoings and as to repair and decoration and for such period and
generally upon such terms as the trustees in their discretion shall
think fit.'
Thus, the trustees, by use of their discretionary power in the will,
permitted the beneficiary to occupy the dwelling, and the judge held
that the beneficiary did then occupy the dwelling 'under the terms of
the settlement' and not merely by permission of the trustees in the
exercise of the trustees managerial power.
In my case, the trustees have discretionary power to appropriate trust
property towards the satisfaction of the share of the beneficiary, and
it is on that basis that the beneficiary occupies the dwelling.
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Clarification of Answer by
pafalafa-ga
on
07 May 2003 12:50 PDT
Ryllis,
Please let me know how you think we should proceed.
I actually interpret the cases you provided quite differently than you
do, but it would not do to debate the correct interpretation here -- I
am not a lawyer, and Google Answers is not intended as a source of
professional legal advice.
Certainly, trustees can grant occupancy consistent with any rights or
conditions "under the terms of the settlement". That goes back to the
point I made in my original answer, that "the particular terms of the
will in question are the only way to provide an ultimate answer to
your question."
As for trustees being able to grant a "right under the will" -- as
your question asks -- I think the law I referenced clearly does allow
them that right...but again, our interpretations seem to diverge.
To research your question, I contacted a number of authorities in
Queensland, mostly through the Public Trustee Office. If you haven't
consulted with the Public Trustees yourself, you might want to
consider it -- they are on the web at:
http://www.pt.qld.gov.au/
Use the "Contact Us" button to ask them any questions you may have.
I'm posting the answers I received from the Public Trustees for your
consideration (if I receive other replies, I will post them as well).
Beyond that, I'm not sure what else I can add, and would appreciate
any suggestions you have as to the most sensible next steps.
pafalafa-ga
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Regional Manager
Public Trust Office
Mackay
Have you sighted a copy of the Will ? There may be several answers to
your question.
Firstly if the Will provides for a "right to reside" or a "life
interest" to a particular beneficiary the Trustee is entitled to
follow
those terms and grant the "right" to reside to the beneficiary until
such time as the beneficiary elects to cease that right or dies.
Alternately, the subject property, may form an asset in a
discretionary
Trust, which the Trustee controls by virtue of his/her appointmentment
under the terms of the Will and therefore would be subject to the
decision "at the discretion" of the Trustee as to which beneficiariary
received possession and under what conditions.
The clauses in the Will relating to the Trustee's discretionary powers
may give some outline as to how the Trustee is expected to deal with
those decisions but ultimately, unless there are directions of a
contrary intention, the Trustee (particularly if the property is to be
held in Trust) has the final decision on what rights, he/she may grant
to particular beneficiaries.
I would really need to sight a copy of the Will to determine what
further information I could provide.
You may also be in a position to contest the terms of the Will
depending on your relationship to the deceased which may determine
your
eligibility to do so and if the expireation of necessary statutory
period has not yet elapsed.
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Otto.de.Leeuw@pt.qld.gov.au
Whether or not the trustee in the case you have described is acting
correctly will depend on the construction of the Will as a whole and
particularly on the wording of the discretionary power mentioned by
you.
If the wording of the Will is in any way unclear as to the powers of
the trustee in this area, it is best to obtain professional legal
advice.
There is also a provision in the law (s.28 of the Trusts Act 1973)
which allows a trustee to provide a dwelling for beneficiaries in
certian limited circumstances.
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Regiojnal Manager
Redcliffe
In usual circumstances the will should set out the powers of the
trustee.
The Public Trustee does not provide a free legal advice service and I
suggest you have the contents of the will examined by a solicitor as
to
the powers conferred upon the trustee named in the will.
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Legal Officer
Southport
The Public Trustee of Queensland
It is possible to put in a power in a Will to allow the executor and
trustee the ability to permit a beneficiary to liven in an estate
property.
Alternatively it is possible to give a beneficiary a right of
residence
in an estate property. The property could be specifically named in the
Will or it could be selected by the beneficiary, say within 3 months
of
the date of death.
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I hope this is helpful.
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