Note there are different types of trusts. Even if you do not need to pay duty, the trust deed may need to be lodged with the relevant revenue authority so they can mark that no duty is payable. This is in accordance with the provisions of the Duties Act 1997 (NSW), which is administered by the NSW Office of State Revenue. - 4 min read, Wealth - 6 min read. Despite the initial cost of setting up a company, it is generally recommended that a company act as trustee of a discretionary trust. The trustee may be one or more individuals or a private (i.e. In Australia, a discretionary trust is a common structure to run a business out of because it offers many taxation . All related legal documents such as, Consents for Individual trustees or consent of Directors of the trustee company to act as trustees of the Trust, Minutes of Trustees to set up the discretionary trust etc. Questions, comments or complaints? The following are several pros of discretionary trusts. Although trusts are commonplace, they are frequently misunderstood.There are many examples of how trusts figure in everyday transactions: 1. The trustee is required to complywith the terms of the trust deed, Trustee Act (or similar legislation) in the relevant State or Territory of Austra… A discretionary (family) trust is a type of trust where the trustee can control the allocation of income and capital to beneficiaries. If flexibility is important to you, a discretionary trust may be the best option. Just as discretionary trusts offer ways to accumulate assets for beneficiaries, they also have an element of flexibility over how capital and income are distributed. The bank may require the trust ABN before it will open the account. We collect information over the phone, by email and through our website. We store and use your information to deliver you better legal services. The term ‘discretionary trust’ (also known as a family trust) refers to the situation where a fixed interest or entitlement in trust funds is not held by the beneficiaries. It provides asset protection in that it can prevent a beneficiary’s creditors from accessing key assets. To start setting up a trust, call LegalVision’s taxation lawyers on 1300 544 755 or fill out the form on this page. Wealth In Kennon vs Spry, the High Court found that assets in discretionary trusts are liable to being used in property settlement agreements. It is at the discretion to the trustee to determine which of the beneficiaries will receive the income and capital of the trust, as well as the amount that each beneficiary would get. Using a company also avoids unnecessary administration where changes must be made in respect of the registered owner of each trust asset where there are changes in individual trustees. In this article, we set out the eight steps involved in setting up a discretionary trust. legal issues while staying on top of costs. If the net income is distributed by the end of each financial year, taxes may be minimised. - 7 min read. You may also like this video which unpacks and explains discretionary trusts in simple terms. The trustees can decide to distribute income or capital among the beneficiaries as they see fit. For example, a discretionary trust is different to a unit trust and a hybrid trust. Discretionary trusts – Family Trusts These are often called “family trusts” because they are usually associated with tax planning and asset protection for a family group. For example, if a creditor was to pursue the assets of a beneficiary, trust property is generally protected because the trustee is the legal owner. Unfortunately, there are also several cons to discretionary trusts. 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