Our business accountants can assist with the establishment of a "standard" Discretionary (Family) Trust and/or a Unit Trust.
In simple terms, a discretionary trust has flexibility in how it distributes income, whereas a Unit trust has less flexibility and is more fixed in how it must distribute income. Units in a unit trust will are somewhat similar to shares in a company.
There are generally two main reasons our clients use trust structures:
1. Tax minimisation
2. Asset protection
Trusts generally provide more favourable overall tax rates due to their ability to:
- Flow through capital gains.
- Distribute income to lower taxed entities/persons.
In general, discretionary trusts (family trusts), provide better asset protection. This is in comparison to holding the asset a persons own name, or in the name of a company (owned in a persons own name).
However, trusts do not provide absolute and complete protection from all persons at all times. Where asset protection is the main reason for establishing a trust, we suggest you speak directly with an experienced lawyer that regularly deals in trust matters. If needed we can refer you to a trusted advisor.
If you have any questions regarding the annual compliance for your Unit or Discretionary Trust, or if you would like to discuss establishing a trust, please contact our office at your convenience.