The Value of Family Trusts
Currently there are two significant cases before the Courts concerning assets held in family trusts.
In the Reinhart family the fight is about the control of $4 billion worth of shares in the company set up by Gina Reinhart’s father Lang Hancock.
Lang Hancock made a fortune from iron ore after famously discovering the world’s largest iron ore deposit in the Pilbara region of Western Australia in 1952.
When her father died in 1992, Gina became Executive Chair of Hancock Prospecting and the family’s HPPL group of companies. She is now widely regarded as Australia’s wealthiest person and one of the wealthiest women in the world.
Lang Hancock set up at trust for the benefit of his four grandchildren which allowed them to access the funds in the trust when the youngest reached 25 years of age. Gina amended the family trust deed to ensure that she kept control of the trust until 2068.
The grandchildren expected their inheritance and the right to spend it. Gina wanted to delay the inheritance for several reasons, including delaying the vesting date as long as possible to defer the payment of capital gains tax.
The second case is the upcoming fight in the Lew family in Melbourne. Solomon Lew is a former Chairman of Coles Myer and is one of Australia’s richest men.
Mr Lew, like many wealthy people, has a family trust which he controls and his family are beneficiaries. However two of his children are currently in the Family Court where their former partners are seeking orders from the Court that they receive assets from the family trust.
Similarly to Gina Reinhart, Solomon Lew is looking to keep the affairs of the family private.
These cases are an excellent reminder that where there is money there will often be a dispute.
However the cases are also a reminder that assets held in family trusts can have significant asset protection and taxation advantages.
Clearly any family with significant assets should seek professional help from their financial advisors and lawyers and consider the obvious benefits of establishing trusts not only during their life but also in their wills.