The position in Australia is that for the most part, a beneficiary must be a person in order for the courts to decree performance. Furthermore, in order for a valid trust to be created, a gift must be made to a charitable body.

Australian case law has generally ruled, that a gift must be charitable and drafted for the benefit of an actual person – rather than a gift for the maintenance of an animal.

Although case law may have by and large ruled against making a gift of maintenance for a pet, however, the law may not, prevent a person from theoretically providing for the maintenance of a pet in which they have an attachment towards.

In the event that an individual wishes that a particular person provide maintenance for their beloved animal, the provision should be drafted in such a way that it cannot be left for others – such as the person providing the maintenance of the animal – to change the conditions, therefore, potentially overriding the wishes of the person making the trust. So if you want someone to provide maintenance for your pet, always make sure you do so carefully.

There is no doubt that many of us will develop a close connection to pets or animals that have provided us with company. Furthermore, many of us will understandably want to provide adequate care for our cherished companions after our passing. However, the law in Australia is rather tricky, and the bestowing of a trust towards an animal can be rather complex and for the most part, may be not feasible.

Provided that the Div 50 of the Income Tax Assessment Act 1997 (Cth) conditions are met, charitable trusts will be exempt from income tax. In addition to exemptions from income tax, charitable trusts may enjoy concessions for payroll tax, fringe benefits tax, land tax, stamp duties and other forms of taxation.

Valid charitable gifts can potentially be held in perpetuity, however, at the time of inception, the charitable trust must satisfy the rule against perpetuities.

On an initial reading, trusts that interfere with the sanctity of a marriage by encouraging the dissolution of a marriage are void. In Church Property Trustees, Diocese of Newcastle v Ebbeck [1960] 88; (1960) 104 CLR 394, the testator bestowed his residuary estate on trust to his wife for life, and subsequently, to his sons in equal shares which would be forfeited if at the time of the passing of his wife, the sons or their wives failed to profess the Protestant faith. Before the will came into being, two of the testator’s sons had married women of the Roman Catholic faith, and the third son was also about to marry someone who followed the Roman Catholic faith. The High Court held that the clause had a tendency to encourage the dissolution of a marriage and contrary to public policy, and was held to be void to the extent that the clause restrained religious choice (at 8):

“In the condition contained in the proviso to the gifts in remainder made by the will now before us general terms are used, but the purpose or at all events the effect is specific. It is specific because it applies to a precise situation in which each of two sons already stood and upon which the third was about to enter. It meant that to avoid the forfeiture of the gift the son must, whether by chance or design, obtain a change of the situation so that either his wife changed her religion or ceased to be his wife; and that must be before his mother died. For present purposes the condition that at his mother’s death he himself should not be of the Roman Catholic faith may be left out of consideration and so may the fact that the gift in an alternative form takes effect subject to the same proviso in the event which did not happen of the testator’s wife predeceasing the testator. It is true that, had that event occurred, assuming the proviso to be valid and not inoperative, it would have been determined at the death of the testator whether the condition was in each case fulfilled; there would have been no interval for recantation of faith or dissolution of marriage. But we are concerned with the form of the proviso which applies to the events that did happen. In a marriage between a Protestant husband and a Roman Catholic wife it makes the continued adherence by the wife to her faith the cause of his forfeiting his very substantial share in his father’s estate with the alternative of his disencumbering himself of his wife before his mother dies. Whether designedly or not such a disposition creates an opposition between the wife’s religious beliefs and a serious temporal interest of her husband, and doubtless by consequence of her own. If she cannot or will not desert her faith it provides an inducement to him of a pecuniary or proprietary nature the operation of which cannot but be in opposition to the policy of the law, its policy to preserve and maintain marriage.”

However, in Ramsay v Trustees Executors and Agency Co. Ltd [1948] HCA 44; (1948) 77 CLR 321, the High Court upheld the direction of the testator that his son would be absolutely entitled to the capital of a trust estate if his wife, still being his wife, dies before him, or if the marriage is terminated by divorce. It was argued that the interest in the trust estate was given upon an illegal condition because it was an inducement for the testator’s son to bring about a divorce. However, Latham CJ said (at 5):

“[T]hat the provision in this particular case was intended (so far as intention is important) to secure an income to the son during the marriage, and to prevent his wife obtaining any interest, either directly under the father’s will, or indirectly through her husband’s will, in the corpus. There is nothing illegal in such an intention – it is simply a case of a testator choosing his beneficiaries.”

There may be an obligation for the superannuation death benefit to be paid into an estate via a trust deed, or a binding death benefit nomination. Furthermore, a trustee is able to exercise their discretion under a trust deed by paying their entitlements into the estate, and if such a course of action is undertaken and is not challenged, the benefit will then form part of the estate.

If the superannuation benefit has become part of the estate, then the ordinary family provisions will be applicable.

There may be occasions where a beneficiary to an estate wishes to acquire the property immediately due to financial hardship, or the person has no income (for example, the spouse of the deceased), and in such a circumstance, can lead to issues for the beneficiary. First, a beneficiary does not have a right to any assets associated with the estate until it is distributed by the executor. However, a spouse may apply for a pension, or they may also be able to obtain a loan using the estate as security.

For spouses that have joint bank accounts, the right to the account will generally pass to the surviving account holder.

Generally speaking, the rule against perpetuities prevents a property owner from using trusts to control the property for an extended period of time into the future. Furthermore, States have modified the rule against perpetuities somewhat, with Queensland and Victoria for example stating the period of perpetuity cannot exceed 80 years, or the general law position of the interest in the property may apply. The general law rules that a trust must not extend further than 21 years after the death of a party who was alive during the period of when the trust was created.

When a will is open to the grant of probate, a person wanting to contest the will may question the validity of the will on some of the following grounds:

>> the will was not the final document;

>> the person lacked the mental capacity;

>> the will was altered after it was signed;

>> the person was unduly influenced by another person who may benefit from the will;

>> the will was revoked;

>> the will lacked clarity.

Under the authority of the Bankruptcy Act (the Act), the courts can set aside a trust which has been created to avoid creditors if it is established that the purpose of the trust was to avoid a creditor, or has that effect.

Unless there are specific statutory protections, all of the settlor’s property, belongs to the trustee-in-bankruptcy from the date of insolvency.

Crucially, the Act under limited circumstances, can set aside any trusts that were created before the date a settlor declared bankruptcy, and can include instances of undervalued transactions, along with any transfers done with the purpose of defeating the interests of a creditor.

When analysing the concept of moral duty in regards to family provision, the initial test which first addressed the concept was set by the Privy Council in Bosch v Perpetual Trustee Co (Ltd):

“Their Lordships agree that in every case the court must place itself in the position of the testator and consider what he ought to have done in all the circumstances of the case, treating the testator for that purpose as a wise and just, rather than a fond and foolish, husband or father.”
One of the essential things to be aware of in regards to the test in Bosch, was it was not so much an objective test of what a wise and just person who is fully aware of all the relevant circumstances should do, but instead, the test required the court to place itself in the position of the testator.

The concept of moral duty was confirmed by a majority in the High Court in Vigolo v Bostin, with Gleeson CJ noting that the concept in relation to legislation is to be understood more as a ‘moral value’ rather than a legal right:
“In explaining the purpose of testator’s family maintenance legislation, and making the value judgments required by the legislation, courts have found considerations of moral claims and moral duty to be valuable currency. It remains of value, and should not be discarded. Such considerations have a proper place in the exposition of the legislative purpose, and in the understanding and application of the statutory text. They are useful as a guide to the meaning of the statute. They are not meant to be a substitute for the text. They connect the general but value-laden language of the statute to the community standards which give it practical meaning. In some respects, those standards change and develop over time. There is no reason to deny to them the description ‘moral’.”

However, the New South Wales Court of Appeal has expressed some reservations about using the term ‘moral duty’, stating that the term can be misleading as the court has described in Nicholls v Hall and the Court in some cases, has settled for the term ‘moral claim’ instead.

All jurisdictions have their statutory regimes as to how a will may be revoked. However, some of the general ways in which a will, or part of a will may be revoked can include:

>> marriage;

>> divorce or annulment;

>> the creation of a new will;

>> declaring an intention to revoke the will.

Trusts which are proprietary in nature, the law for the most part, recognises the rights of a beneficiary to transfer or assign their interest. However, for non-proprietary interests, such as choses in action or mere expectancies in regards to discretionary trusts – can be assigned and is subject to agreement.

Furthermore, for equitable trusts, transfer and assignment may be limited by the terms of the trust deed, and it’s also worth noting that the law recognises that a beneficiary has the ability to disclaim a trust.

Using the Succession Act 2006 (NSW) as our example, the court may dispense with the formal requirements for the execution, alteration or revocation in s 8 under the following circumstances:

“(1) This section applies to a document, or part of a document, that:

(a) purports to state the testamentary intentions of a deceased person, and

(b) has not been executed in accordance with this Part.

(2) The document, or part of the document, forms:

(a) the deceased person’s will-if the Court is satisfied that the person intended it to form his or her will, or

(b) an alteration to the deceased person’s will-if the Court is satisfied that the person intended it to form an alteration to his or her will, or

(c) a full or partial revocation of the deceased person’s will-if the Court is satisfied that the person intended it to be a full or partial revocation of his or her will.

(3) In making a decision under subsection (2), the Court may, in addition to the document or part, have regard to:

(a) any evidence relating to the manner in which the document or part was executed, and

(b) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person.

(4) Subsection (3) does not limit the matters that the Court may have regard to in making a decision under subsection (2).

(5) This section applies to a document whether it came into existence within or outside the State.”

Although the rigid requirements have been tempered, the ultimate decision still rests with the Court to decide whether the requirements of the legislation have been made out.

Trusts which are proprietary in nature, the law for the most part, recognises the rights of a beneficiary to transfer or assign their interest. However, for non-proprietary interests, such as choses in action or mere expectancies in regards to discretionary trusts – can be assigned and is subject to agreement.

Furthermore, for equitable trusts, transfer and assignment may be limited by the terms of the trust deed, and it’s also worth noting that the law recognises that a beneficiary has the ability to disclaim a trust.

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