Income Tax Rates, Creation & Express of Trust & Beneficiary Duties - Powers and Rights Liabilities of Trustees - Law Assignment Help

Assignment Task-
 

INSTRUCTIONS

Please read the two question scenarios below and answer with the information provided.

NO RESEARCH REQUIRED

Please requires information if any of it is missing.

THIS PAPER CONTAINS TWO QUESTIONS. YOU MUST ANSWER BOTH QUESTIONS.

QUESTION 1

Walter is a successful financier and property developer and, in March 2019, after reading in the newspaper that the Commonwealth and State Governments were planning to increase income tax rates for high income earners and introduce new taxes on property developments, he decided that he ought to dispose of some of his wealth. Walter owned a $4m property in Lane Cove.
 

On 6 August 2019, Walter sent an email to his lawyer Saul, in which he wrote, “I want you to hold my Lane Cove property on trust for my wife Skyler and my son Junior, but I want the paperwork to say that Junior is the only beneficiary. You already hold a power of attorney for me so just take care of it for me.” Walter already has the Certificate of Title, and duly prepares a Memorandum of Transfer to transfer the property to himself and signs it as attorney for Walter and does nothing more.
 

The same day, Walter calls his daughter Holly and says to her, “from now on, I hold our farm in Bowral on trust for you” and “I’ll put it in writing for you when I get back from my business trip to Indonesia”, but forgets to do this. Holly loved the farm and, after knowing that it was hers, she and her husband spent $50,000 of their savings renovating it, removing old grapevines and planting new ones that they brought back from the Barossa Valley in South Australia.
 

Further, Walter’s mother held 50 acres of land near Mittagong on trust for Walter. Walter called his mother that day, which he had not done for 3 years, and told her that he was declaring himself trustee of his equitable interest in the land for Junior and Holly.
 

In April 2020, Walter became seriously ill with lung cancer and became hospitalised. No one in his family visited him in hospital except for his long time business partner, Jesse. On 4 June 2020, Walter says to Jesse, “You are the only one to care about me. My family only cares about money. I want you to have my farm in Bowral when I die. The title deeds are in my safe deposit box to the bank. Oh, have my car too – I loved that Ferrari, but I sure don’t need it anymore.” Walter hands Jesse a keyring with the only key to his safe deposit box and a car key. Walter died a few hours later.
 

Walter has a properly executed will appointing Saul as his executor and trustee, which left everything he owned to Skyler.

To my understanding question 1, you require information such as:

•  Creation of trust
• Express Trust
• Beneficiary duties
•  Powers and rights
•  Liabilities of trustees
• Resulting trust
• constructive trust

QUESTION 2

Simon is a director of Simon Catering Pty. Ltd., a catering business based in the Eastern Suburbs of Sydney. The business ran into financial difficulties and was in danger of defaulting on $1m in loan repayments that it had to make by 1 October 2020. In September 2020, Simon approached Lenny Shark for the $1m to meet those repayments and offered a first ranking mortgage on his property in Belluvue Hill as security, to which Lenny agreed. Lenny transferred the $1m online to Simon Catering’s bank account.

Simon’s accountant, Michelle, did not know of the arrangements between Simon and Lenny, and used $410,000 of those funds to pay trade creditors. By the time the loan repayments were due on 1 October 2016, there was only $600,000 left in the bank account. The creditors placed the company in liquidation and Peter was appointed as its liquidator. The total assets of the company was found to be around $720,000, while the debts of the
business amounted to $2.2m (including the loan advanced by Lenny). Soon after, Lenny demanded the repayment of the $1m as the loan repayments were not made from his loan funds.

On reviewing the accounting records of the business, Peter found that $2m of the profits of the business over the past 5 years have been put into a Simon Catering Education Trust that was set up with the stated purpose of providing for the education of the past, present, and future children of the past, present, and future employees of the business. At the time of the liquidation of the business, $1.7m was held in that trust.

The same with question 2, you will require:

• Charitable Trust
• Termination Trust as loan shark is illegal in Australia.
• Resulting trust

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