When you’ve completed the objectives of your trust or no longer need it for its intended purpose, several steps are necessary to properly wind up and finalise the trust. Here’s a guideline on what to do:

  1. Review the Trust Deed: Begin by reviewing the terms of the trust deed. Ensure that all conditions and requirements to vest and wind up the trust stipulated within the trust documents have been fulfilled. The trust deed and any subsequent variations to it will provide guidance on the applicable rules as to how to terminate the trust and distribute its assets.
  2. Notify Beneficiaries: You may need to inform all beneficiaries and interested parties involved in the trust about your intention to terminate it. Provide them with a timeline for the process and any necessary information they may require. You may need to obtain consent from certain persons names in the trust deed such as appointors, guardians, protectors etc before you can wind up the trust.
  3. Distribute Trust Assets: Determine how the trust assets will be distributed among the beneficiaries. That will need to take into account the liabilities of the trust including how the tax liabilities will be paid pending the proposed final distributions. Follow the instructions outlined in the trust deed regarding the distribution of undistributed income and capital of the trust including its specific assets. If there are rules or conditions, ensure they are met during the distribution process.
  4. Settle Outstanding Obligations and Liabilities: Before winding up the trust, settle any outstanding debts, taxes, or liabilities associated with the trust. Don’t forget to repay any loans owing including any amounts that have not yet been paid to beneficiaries from previous distributions of income or capital. This may also include paying off creditors, finalising outstanding tax obligations, and resolving any legal or administrative matters.
  5. Obtain Legal Advice: Seek advice from a qualified legal professional experienced in trust law to ensure that all legal requirements are met during the winding up process. They can assist in drafting the necessary documents and ensuring compliance with relevant laws and regulations.
  6. Formally Terminate the Trust: Draft a formal document, such as a trust vesting deed or declaration of trust vesting, to officially wind up the trust. This document should be signed and dated by all relevant parties and may need to be witnessed depending on legal requirements.
  7. File Required Documents: You may need to file certain documents with the appropriate authorities to officially vest the trust. If the trustee I a trustee company you may need to consider winding the trustee itself up. This would involve an application to the Australian Securities and Investments Commission (ASIC).
  8. Maintain Records: Keep detailed records of the trust winding up process, including all documents, correspondence, and transactions related to the closure of the trust. This will help demonstrate compliance with legal requirements and provide clarity in case of any future inquiries or disputes.

By following these steps diligently and seeking professional guidance where necessary, you can effectively wind up your trust and ensure a smooth transition for all parties involved. To discuss your trust speak to one of our lawyer.