Family Trust Distributions

We had a new client come to us last week.  He was frustrated and stressed about several letters he’d received from the ATO regarding the operations of his family trust.  The trust had a series of long standing  UPEs (“Unpaid Present Entitlements”).   These are distributions made to beneficiaries of the trust that have been declared but not actually paid.   Several of these had been outstanding since 2010.   The clients affairs had been reviewed by the ATO and he was subsequently being asked for a ‘Please explain’.   UPEs against a trustee have been caught up by the provisions of Div 7A (Loans)  since December 2009.   Payment of these UPEs are required within a specific time frame under Div 7A.  Unfortunately for the client, payment of these UPEs hadn’t been made and the total of UPEs was now rather significant.

Had the clients previous adviser notified the client of this, the client would not have been under such scrutiny and subsequent stress.

 

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