Dealing With Trusts When Drafting The Business Sale Contract
When a party to a business sale contract is a trust (normally a discretionary or unit trust) it is important to reflect this correctly when completing the buyer’s or seller’s details on the contract. A failure to do so could create ambiguity as to the correct party entering into the contract. This may leave the other party high and dry if things go bad.
Every trust must have a trustee. This is the entity that controls the trust and is the legal owner of all trust property (owning it for the benefit of the beneficiaries of the trust). Therefore, the business broker must simply find out:
- the complete name of the trust (e.g. The Johnson Family Trust);
- the complete name of the trustee(s) (e.g. JMT Enterprises Pty Ltd A.C.N 456 789 123).
Be careful to ensure that all trustees are ascertained as there could be more then one. This information is found in the trust deed itself. Every trust has one. This is the document that sets out the powers and responsibilities of the trust. What it can and cannot do.
Therefore, in the example given above, the party would be noted on the contract as: JMT Enterprises Pty Ltd A.C.N. 456 789 123 ATF The Johnson Family Trust. The trustee is always written first and the acronym “ATF” stands for “As Trustee For”. When the trustee is a company, inserting the ACN is also recommended for identification purposes.
Getting this right upfront could avoid a big problem for a party and at the very least some mucking around to get the information right down the track.
Want my view on your own situation?
Book an initial consultation: up to two hours with me by phone for a fixed fee of $1,650 (including GST), then a short written note of my advice and next steps. If my conflict check means I can't act, I'll refund your fee in full. To check anything first, email
info@klaw.com.auor call
(07) 3103 3199.
Joe Kafrouni, Accredited Specialist in Business Law, Kafrouni Law
Disclaimer: This article is general information only and is not legal advice. Before acting on it, get advice on your own circumstances. To the extent the law allows, Kafrouni Law accepts no liability for any loss arising from reliance on it. This article is the copyright of Kafrouni Law.
What People Say
Book an initial consultation
An initial consultation is the best way for us to find out whether, and how, I can help. It suits business owners and directors facing a decision that matters. You get my considered view of your situation, not just a first impression.
The fee is a fixed $1,650 (including GST). It covers a phone consultation of up to two hours, plus up to one hour of my time to consider the material you send me beforehand and to prepare my written note afterwards. Here is how it works:
1. When you book, you tell me briefly what the matter is about and who else is involved, so I can carry out a conflict check and confirm I’m free to act. If I can’t act for you, I’ll refund your fee in full.
2. I tell you what information and documents I’d like to see, and I consider them before we speak.
3. We talk it through by phone. I give you my initial advice, the options I see and what I’d do in your shoes.
4. Afterwards, I send you a short written note of my advice and the next steps I recommend.
If I can help further, I’ll explain how. If I can’t, I’ll say so. You are under no obligation to engage me further. If your matter needs more than this, I’ll send you a proposal setting out how I can help and an estimate of my fees. No further work starts until you accept it.
I keep only a limited number of consultation times. If none suits you, or you’d like to check anything before booking, email info@klaw.com.au and I’ll do my best to accommodate you.