What is a Family Trust
- A family trust is generally established by a family member for the benefit of members of the ‘family group’;
- A family trust can provide the family with certain tax advantages, provided that the trust passes the family control test and makes distributions of trust income only to beneficiaries of the trust who are within the ‘family group’;
- A family trust can also assist in protecting the family group’s assets from the liabilities of one or more of the family members (for instance, in the event of a family member becoming bankrupt or insolvent);
- A family trust also provides a mechanism to pass family assets to future generations tax effectively; and
- A family trust can provide a means of accessing favourable taxation treatment by ensuring all family members use their income tax “tax-free thresholds”.
A family trust has many other potential benefits, including, avoiding issues such as challenges to the family Will, following the death of a member of the family.
Why use Family Trusts
Family Trusts provide families with greater control over the assets in their family Trust. This may include investments or business assets that the family wish to have more control over.
Caution with a family trust
While a family trust can provide you and your family with greater control of your assets, you need to be careful that the Trust is established carefully and managed correctly.
Note, there are fees associated with establishing a family trust and ongoing fees per annum. However, with sound assets within the family trust, the benefits can still outweigh the fees.
For families or individuals with sound income and a growing portfolio of assets you may wish to consider discussing the benefits of a family trust for you and your family.
We will help explain your options prior to you meeting with a solicitor in order to develop a well structured Family Trust for your needs. We can also recommend an experienced solicitor if required.
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