Advantages of ordering unit trusts from DBA Lawyers

DBA Lawyers has always focused on providing quality documents and service instead of competing with other document suppliers on price. As lawyers advising on unit trust investments, we better understand the needs and risks inherent in such transactions and develop our documents based on this experience.

We often advise clients who have not obtained appropriate documents and note that substantial costs, time and damage can arise when documents used are not fit for purpose.

Advantages

Some of the advantages from ordering unit trust documents from DBA Lawyers are:

1. 1. 1. 1. Our unit trust is a fixed trust for income tax purposes (eg, for trust loss and franking credit purposes). Importantly, the non-arm’s length income (NALI) provisions, namely s 295-550(4) of the Income Tax Assessment Act 1997 (Cth) state that ‘Income’ derived by the entity as a beneficiary of a trust, other than because of holding a fixed entitlement to the income, is NALI.
         2. Revenue NSW has expressly confirmed that our unit trust is a fixed trust for NSW land tax purposes
         3. Our unit trust deed contains a comprehensive ‘limitation of liability’ clause so that unitholders are not exposed to liabilities. Refer to our article: Trustee and unitholder liability in unit trusts as numerous suppliers leave their trustees and unitholders exposed to significant legal risk.
         4. Our unit trust deed has been designed so that it can be used as a ‘50-50 non-related unit trust’ arrangement where there is SMSF involvement. We also recommend using a corporate trustee with our constitution as the decision-making and share structure in our constitution also supports a ’50-50 non-related unit trust’ arrangement. For more information see: https://www.dbalawyers.com.au/investments/important-good-company-constitution/ and https://www.dbalawyers.com.au/announcements/not-companies-created-equal/.
         5. Our unit trust deed gives the power to have meetings using technology, so meetings can occur even if some unitholders or trustees are in different locations.
         6. Our lawyers regularly work on unit trust matters, such as providing advice about SMSFs’ investing in unit trusts and related structuring, meaning that our documents are well suited to these types of investments.
         7. We have advanced online ordering capability with swift turnaround times.
         8. We review our unit trust documents on a regular basis and obtain feedback from a number of experienced trust and tax practitioners.
         9. We can also assist with other related documents such as a unitholders agreement or with the issue or transfer of units and other aspects of these transactions.
         10. Our documents are provided by a law firm that is a registered legal practice with professional indemnity insurance. Many other suppliers are non-qualified and non-expert and while some claim that they source or licence their documents from a law firm, or have their documents signed-off by a law firm, this may not mean the documents are updated regularly.
         11. Our firm has approachable and helpful staff who can assist beyond merely preparing documents and can be engaged to provide formal advice.
         12. Our unit trust documents include a detailed memo that explains important concepts and provides practical guidance to trustees and unitholders that is more extensive and informative than many Product Disclosure Statements.

Conclusion

Advisers and clients should have a long-term perspective when choosing a supplier of unit trust documents. In particular, ordering directly from a law firm with the relevant expertise in trusts, tax and SMSFs reduces risk and results in much better value for advisers and their clients.

For advisers, making a decision to order a trust deed from a non-qualified supplier could itself constitute a legal decision for which they can be held liable to a client. Ordering directly from a law firm minimises this risk. For more background in relation to this point, please refer to following article: SMSF deeds – which supplier should you use: a law firm or a non-qualified supplier?

DBA Lawyers offers a wide range of document and consulting services in relation to superannuation and tax matters.

Related articles

Other related articles on trusts can be accessed here:

• Watch out for extra transfer duty on property investments via a company or unit trust
• Should an SMSF have a unitholders agreement?
• Trustee and unitholder liability in unit trusts
• SMSFs investing via unit trusts
• Why is it important to have a Successor Appointor?
• Is your discretionary trust still discretionary? Case law developments on trustee duties

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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. The above does not constitute financial product advice. Financial product advice can only be obtained from a licensed financial adviser under the Corporations Act 2001 (Cth).

Note: DBA Lawyers hold SMSF CPD training throughout the year. For more details or to register, visit www.dbanetwork.com.au or call 03 9092 9400.

For more information regarding how DBA Lawyers can assist in your SMSF practice, visit www.dbalawyers.com.au.

By Shaun Backhaus ([email protected]), Senior Associate, and Daniel Butler ([email protected]), Director, DBA Lawyers

DBA LAWYERS

5 September 2024