Family Discretionary Trusts

Family Discretionary Trusts Lawyers Sydney

These have been around for hundreds of years. Their popularity has never been stronger, despite what you read in the papers. They are a very effective estate planning tool. We know how to use them for inter-generational transfers: what works and what does not. They also have their place in business structures.

A discretionary trust is a type of trust. It has key participants – a trustee (who holds the trust property), the trust property itself (which can usually be added to during the currency of the trust), beneficiaries (who are entitled to the income derived from the property or to the property itself), and the trust deed (which sets out the rules for managing the trust). There are other people involved as well, including the settlor (who starts the trust) and the appointor (who can appoint or sack the trustee).

Leigh Adams Business Lawyers always considers the appropriateness of using discretionary trusts in the estate planning advice which we give. They are also carefully considered when we advise on business structures. A discretionary trust can be an excellent mechanism with which to run a business.

The family discretionary trust can take various forms. Every family is different, and their needs are different. Where a discretionary trust could be used, it is a matter of fine-tuning the discretionary trust concept to fit the circumstances of each client’s personal situation. That is where we can assist you.

We can ask you about your immediate and extended family and suggest ways of ensuring that if used, the discretionary trust can give you and your family an income tax and capital gains tax advantage that it would not otherwise have. These advantages arise from the availability of income splitting and legitimate tax free thresholds.

However, beneficiaries do not have to be limited to individuals. They could be companies, or other trusts as well. We explore these options for you.

We assist by providing advice that will give maximum flexibility to your discretionary trust. Flexibility is important because no-one can predict the future. And with a carefully chosen trustee, the discretionary trust can continue to give income and capital gains benefits for many years into the future.

Our advice can extend to discussing asset protection and how the discretionary trust could be crafted to ensure that maximum protection is given to the assets you have decided to put into the trust. This discussion may include a review of the exposure of any of the beneficiaries to claims by their own creditors. We can help our clients by discussing ways of using a discretionary trust to adequately and fairly deal with such a situation.

Other claims against beneficiaries can suddenly arise when their marriage breaks up and the beneficiary finds themselves in the Family Court. We discuss these issues with you and help you find a way forward which you are comfortable with.

We can advise you on all the applicable taxes (like capital gains tax, GST and stamp duty) which might arise when helping you decide whether to use a family discretionary trust.

If you have any questions, or want to have a general discussion, then please call Leigh on 02 9570 7844.