If you are in an industry where you;
It is highly recommended that you have a trust. A trust can provide the following;
You should consider having a trust if you are in an industry where you could become bankrupt and have creditors. Assets that are beneficially owned by somebody else, then notwithstanding they may legally be in your name as trustee they are (subject to some exceptions) safe from your creditors. It is common for a trust deed to exclude any beneficiaries that are bankrupt. Hence, this can prevent successful claims against any property that is owned by the person or who may receive a benefit under the trust.
The trust tax rate is currently 33% and is due to increase to 39% on 1 April 2024. A common business structure is to trade under a company and the trust would own the majority of the company’s shareholding. The director would be paid a director’s salary and any excess profits would be paid out to the trust and taxed at the current trust’s income tax rate. However, trust’s income can be distributed to beneficiaries who may have lower tax rates and they may claim beneficiary expenses, which can be offset against their beneficiary income. Furthermore, any minor beneficiary under the age of 16 can have a $1,000 of trust income allocated to them tax-free each year.
A trust can last up to 125 years and it is difficult to forecast the needs of beneficiaries over such a long period. A discretionary family trust provides flexibility to cater for different beneficiaries needs at different times in their lives.
By putting your assets into trust, you are a long way towards protecting any children you may have against the danger that:
A family trust is a mechanism for holding assets where property is put into the name of certain people “trustees” (usually you) who hold the property for the benefit of someone else (the beneficiaries, which would usually include you). It is important to understand that although creating a separate asset holding mechanism, the trust itself will not, unlike a company, have any legal existence separate from the trustees. The trustees are, essentially, the trust. The trustees can only use and deal with the trust assets for the benefit of the beneficiaries and cannot treat the assets as their own.
In some circumstances, we can provide our services remotely and have some of the documents signed digitally.
Clients tend to find these exercises will usually pay for themselves in the long term due to reducing the chance of successful creditor claims and being able to allocate trust income to beneficiaries on lower tax brackets.
The fee for the trust formation can usually be covered (partly in or in full) by the cash contribution offered by the bank when you refinance to them. A cash contribution is where the bank pay you monies as a token of appreciation for using their services. The cash contribution amount is usually 1% of the borrowing. A condition of the cash contribution is that you stay with the bank for a period, which is usually three years or so.
Please feel free to call the office for a no obligation chat to discuss your situation and requirements.
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