Understanding Family Trusts

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What is a Family Trust?

In a family trust, a person (or a company) has control over the family assets. This person is the trustee of the trust. The trustee can decide how to share the income and assets between the family members.

Benefits of Family Trusts:

Family Trusts have many benefits, including:

• Flexibility: Because trustee can decide how to distribute income and capital. This can be especially useful for tax planning.

• Asset Protection: Family Trusts can help protect your family assets from creditors, or in a family law property settlement after a relationship breakdown.

• Estate Planning: Family Trusts can help pass on family assets to future generations in a controlled manner.

What to watch out for:

It is essential to get advice from both a lawyer and a tax professional before creating a trust, changing an existing trust, or buying property in a trust. Some of the issues include:

• Stamp Duty: You may need to pay stamp duty when setting up a Family Trust or making changes to a Family Trust. Without expert advice, it can be easy to accidentally create a stamp duty liability for your trust or the beneficiaries.

• Land Tax: The land tax rules for Family Trusts are different to the rules for other kinds of trusts, or the rules for individuals.

• Foreign Ownership: Unless your Family Trust deed meets specific requirements, the law will treat it as being a foreign person (even if you are not). This may mean that the trust must pay surcharge land tax and stamp duty.

How Elringtons Can Help

Whether you are creating a new trust, or dealing with an existing trust, our team of experts is here to help with tailored and specialised advice.

Contact us today to learn more about what we can do for you and your family.