LAW OF COMMERCE: Assessing Tanya's Role as Trustee - [University]

This case study analyzes a scenario in the Law of Commerce concerning Tanya, a wealthy businesswoman with six children, and her desire to become a trustee to save on taxes. The assignment examines whether Tanya can legally fulfill the duties of a trustee as defined by the Corporations Act 2001 and the Trustee Act 1925 (NSW), focusing on the legal relationship between a trustee and beneficiaries, as well as the powers and responsibilities of a trustee. The case refers to precedent cases like Re Levin & Co Ltd [1936] NZLR 558 and Cowan v Scargill [1985] 1, and emphasizes the importance of acting in the best interest of the beneficiaries, which in this case are Tanya's children. The analysis concludes that Tanya can legally become a trustee and perform her duties, including managing tax affairs and preserving assets for her children, referencing the Trust Act of Queensland, which outlines the legal framework for trustees. The assignment underscores the advantages of trusts for tax planning and the importance of adhering to the legal requirements for trusteeship.

Running head: LAW OF COMMERCE
Law of commerce
Name of the Student
Name of the University
Author note

1LAW OF COMMERCE
Issue
The issue related to this case scenario is whether Tanya can be the trustee and
exercise all the available duties of a trustee.
Rule
As per the Corporations Act, 2001 a contract or a relationship is formed between the
beneficiary and the trustee based on the concept of trust. The Trustee Act 1925(NSW), grants
the power and authority to appoint individuals to carry out the statutory duties. Therefore,
trustees are generally appointed in the original trust instrument. As observed in the case of Re
Levin & Co Ltd [1936] NZLR 558, only a legal person with the authority and capacity to
hold and deal with the property can be appointed as a trustee. A trustee will have no right to
execute his rights if no relationship exists with the beneficiary. The trustee must therefore
impound that the interest of the beneficiary must be used to satisfy the loss that are
occasioned to the trust. The general and basic duties lay down the way to preserve and protect
the trust fund for clearing out the income and the capital for the ones who are entitled to
receive. The Trust Act of Queensland establishes the terms of the trust document along with
the applicable legislation. Thus, under the Trustee Law, the trustees are personally liable for
the debts of the trusts they administer (Davenport and Nelson 2017). Secondly, trustees
should be indemnified out of the trust property for the liabilities incurred in the proper
execution of the powers of the trustee (Bottomley 2016). The tax affairs should be managed
by the tax affairs of the trust that includes the process of registration in the tax system.
Cowan v Scargill [1985] 1 stated that the duties of the trustees must be paramount towards
their existing beneficiaries. Following the legal duties, obeying the law and must put the
interests of their beneficiaries first.

2LAW OF COMMERCE
Application
The case scenario states that Tanya was a wealthy business woman having a high
income and six children. She had a company set up for the purpose to save the taxes. The
reason was to reduce the income tax she has to pay from the salary. This was her plan for
preserving the money for her six children. However, as mentioned above, as per the Trust Act
of Queensland, if Tanya wants to be the trustee she has to carry out the legal duties as
mentioned in the Act. The beneficiaries of Tanya would be her six children as her purpose is
to save the money for her children. She can be the most suitable trustee as for that any legal
person or a corporation can play the role of a trustee. However, she has the capacity to hold
and deal with the money that will be saved and used in future. Viewing the benefits of taxes,
the basic merit or advantage of this is that any income that is generated by the trust from the
actions of the business will be allocated to the beneficiaries in lower tax. In this given
scenario, the benefits will be obtained by the children as they are the beneficiaries of Tanya.
If the relevant law mentioned above is applied, the rate of tax is usually higher as compared
to the beneficiaries. However, it can be stated that Tanya needs to carry out the duty of
clearing out the income tax in utmost good faith for providing benefit to her six children
(Speed 2017). Therefore, Tanya has to refer to the Trust Act for executing her duties as a
trustee. Being a wealthy business woman and owning a company, Tanya can legally be a
trustee and carry out the legal duties for her children. Beneficiaries are usually referred to as
the children who belong to the age group of below 18 years. Having a high income usually
means in paying the income tax but as the trustee, she can cut down in paying the income tax
and save it for her children.

3LAW OF COMMERCE
Conclusion
From the scenario, it can be concluded stating that Tanya can become the trustee and
carry out her legal duties as per the rules of the legislation by saving the money for her
children.

4LAW OF COMMERCE
References:
Cowan v Scargill [1985] 1
Re Levin & Co Ltd [1936] NZLR 558
Bottomley, S., 2016. The constitutional corporation: Rethinking corporate governance.
Routledge.
Davenport, K. and Nelson, T., 2017. The court’s role in assisting trustees: Re Beddoe orders
and other directions. Trusts & Trustees, 23(3), pp.343-354.
Speed, R., 2017. The duty of trustees to invest. Taxation in Australia, 51(11), p.618.