A recent Victorian Supreme Court ruling serves as a cautionary tale for trustees and advisers managing discretionary trusts and deceased estates.
The case: Re Estate of Stagliano [2025] VSC 39
After Nicola Stagliano’s death in 2019, the trustee of the Stagliano Family Trust allocated half of the 2019/20 financial year’s income to the “Estate of Nicola Stagliano” and the other half to the deceased’s wife.
However, the Court found that the “Estate of Nicola Stagliano” was not a valid beneficiary under the terms of the trust deed. Here’s why:
- Resolution Wording: The income was set aside for the “Estate”, not the trustee of the Estate. The trust deed defined beneficiaries as including the “trustee of any trust,” but not a trust itself. This made the resolution invalid.
- Timing of Estate Administration: At the time of the trust resolution, the estate administration had not started. The Court confirmed that a deceased estate is not considered a “trust” before or during the estate administration process. An estate only become a trust once the executor (or administrator) has finished the administration process and holds the estate property on trust for the beneficiaries.
Authors
Alice Land, Lawyer
Sam Frey, Head of Estate Group & Principal Lawyer
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Implications
The trust deed stated that any income incorrectly allocated would go to the default beneficiaries.
Other Notes
Where Testamentary Trusts are established under a will, extreme caution should be taken before distributing to them.
Key Takeaway
Don’t distribute from a discretionary trust to a deceased estate without getting legal advice.
Contact Us
If you have clients who might be impacted by this please feel free to reach out: Alice Land, aland@kcllaw.com.au and Sam Frey, sfrey@kcllaw.com.au