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Establishing a Family Trust Fund

2013-03-19

A family trust is a trust usually set up for the financial benefit of members of a particular family. Also referred to as a discretionary trust, it provides tax benefits and protection from bankruptcy, and allows assets to smoothly move from one generation to the next.

A discretionary trust:

  • Allows for family trust elections, which may have tax advantages
  • Can operate for up to 80 years depending on the deed

Like all trusts, trustees manage the assets of the family trust. They may distribute the trust’s income to members in any proportion or in accordance with the trust deed.

Member distributions and proportions can be altered allowing it to take advantage of members on lower tax brackets.

This is especially useful if some adult members are under the tax free threshold. Income directed to these members will be exempt from tax entirely as long as the amount per year is below the tax-free threshold of $18,200.00 per annum. There are various other advantages and techniques that are facilitated by the family trust fund. To this end, detailed legal and financial advice should be sought before establishing such a trust to ensure you utilise the efficiency of this structure to your benefit.

To enquire about whether or not a family trust is suitable for your personal circumstance, talk to one of our accountants today.

 

General Advice Warning:

Liability limited by a scheme approved under Professional Standards Legislation. This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal taxation and financial advice prior to acting on this information. Opinions constitute our judgments at the time of issue and are subject to change. Neither, the Company or any of employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.

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