What are annual distribution minutes?
Before 30 June each year a discretionary trust must decide how that year’s income is going to be allocated among the beneficiaries. The beneficiaries may be yourself, your spouse, children or possibly other parties such as a related company.
This decision is generally documented in a signed distribution minute (or resolution). A properly worded minute is used to address a few technical requirements (relating to trust law) and to provide proof that the decision was actually reached before 30 June.
One of the challenges is that you generally won’t yet know how much income the trust will have earned during the year. For example, if you sign these minutes on 20 June, there’s still 10 more days that the trust could earn income or incur expenses.
Therefore, to be effective, we achieve clarity of the beneficiaries’ entitlement through two alternate options: