There are many benefits to property ownership whether for lifestyle or future financial security.

Introduction

Property owners have several options available to them when deciding how to hold real estate in an asset portfolio, including by a trust arrangement.

This article below outlines what happens when there is change of ownership of a property owned under a trust.

What happens when there is a change of Trustee?

It is important that ownership details of a property are updated as soon as possible upon any change occurring with respect to a trustee of a trust. In our experience, it can be common for a trustee to retire with a new trustee appointed, however, the details of the registered proprietor of any property held under the trust are not updated to reflect the new ownership details and the issue is not discovered until the new trustee intends to sell the property or deal with the property in some other manner.

Generally, when a trustee of a trust is changed, for example from personal trustees to corporate trustees or vice versa, or even between corporate trustees or when an additional trustee is appointed, it is necessary to update the Title records for all properties held by the trust (as well as updating the ownership of other assets in the trust, such as bank accounts). Usually, transferring a property to a new proprietor would attract stamp duty. However, a stamp duty exemption pursuant to Section 33 of the Duties Act 2000 (VIC) is available subject to the provision of all relevant evidentiary documents to the satisfaction of the Commissioner of State Revenue. This involves lodging an application to the State Revenue Office.

Applying for a stamp duty exemption

For the application of the stamp duty exemption, the following documents are required to be provided on behalf of the trust:

Deed of appointment of the new trustee and the deed of retirement of the retiring trustee.
Stamped trust deed together with any subsequent amendments. (Note: An exception applies for Superannuation funds as such trust deeds are not required to be stamped).
Stamped transfer of land to the retiring trustee.
Title showing when the retiring trustee was registered on title.
Council rates notice of the property being transferred.
Financial statements of the trust showing when the property first became an asset of the trust.
Last financial statements of the trust prepared prior to the transfer showing that the property is still an asset of the trust.
Minutes of the retiring Company Trustee Director’s meetings showing the change of trustee.
A statutory declaration by each of the retiring trustee and new trustee addressing a number of matters including whether there is any change of beneficial interest in the property and whether any consideration has been paid.

With the passage of time, the ability of the trust to obtain all the relevant documents for provision to the State Revenue Office may get more difficult. The trust may have changed advisors, a trustee may subsequently pass away or there may be changes to the directors of a trustee and the trustees at the time of the transfer of the property will be required to provide additional information and documents to address any gaps in available documentation.

Accordingly, all necessary steps should be taken as soon as possible. We recommend planning should be undertaken prior to completing the change of trustee, if possible.

How can Sharrock Pitman Legal assist?

Investing and divesting in property that is subject to a trust arrangement is a more complex process than regular property transactions. It is recommended to seek both financial and legal advice to ensure not only, that any tax liabilities met, but also that the details of the registered proprietor are kept up-to-date. Please feel free to contact our Property Law team for assistance with structuring a property portfolio through a trust arrangement. Please call 1300 205 506 or email property@sharrockpitman.com.au.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.‍

Written by a member of our Legal Team

Shubha Rao

For further information contact

Shubha Rao

Shubha Rao is a Senior Associate in the Property Law team at Sharrock Pitman Legal.

When is Probate not required?

Lost Family Trust Deeds – an update

Lost Trust Deeds: a common problem

There are many benefits to property ownership whether for lifestyle or future financial security.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.

You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE:

(03) 8561 3318

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Land Development and Joint Ventures

What happens when there's a change of ownership of a property owned under a trust?

There are many benefits to property ownership whether for lifestyle or future financial security.

Introduction

What happens when there is a change of Trustee?

Applying for a stamp duty exemption