Governance issues abound as boards and management assess alternative responses to the proposed changes
For many trusts, it's not just about new compliance requirements; it's a matter of business model sustainability. Changes to taxation and rules for the calculation and disclosure of distributable cash may have a significant impact on the trust's long-term viability. To adapt to the new rules — and make the right decisions for the future — management of trusts should develop a strategic response immediately.
The changes in the taxation of trusts will have significant implications on how various trusts are managed in the future. Some large-cap trusts have already announced that they will be able to adapt their businesses to the new tax regime, and will continue as trusts after the four-year transition period. Alternatively, the business models of some trusts have been terminally affected by the new rules.
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