Explanation of Family Trust in Australia

Family trust in Australia simply refers to a trust set up by a family group or a member of a family to benefit the rest of the members of that family. In simple words, the term “family trust” mentions to a discretionary trust set up in which it holds a family’s assets or to conduct a family business. It is established to protect the assets as well as established for tax purposes. Certain tax benefits arise from the set up of this discretionary trust. The discretionary trust is the more exact and accurate name for a family trust. It provides the trust passes the various legal and taxation tests to determine its eligibility.

Before getting into the advantages, you must understand some terms.

Trustee: You can say that a trustee is the manager of the fund. The trustee is completely responsible for the trust and its assets.

Beneficiary: He is anyone who can benefit from the assets and wealth held in the trust.

The settlor: It is the third party person who plays the role of giving the assets of the trust to the trustee.

There are many advantages of the family trust. The five are the most common and important advantages which are mentioned below:

Asset Protection:

It is the most common advantage. Generally, a family trust is the most famous structures in the protection of assets from bankruptcy or business failure. Here the trustee is the most important who is responsible for the trust and its assets. Such as the ability to purchase a house for a child to live in without ownership being forfeited because the ownership remains within the trust. In a family trust, these are usually referred to as Mom and Dad, and their children and all those who are dependents are the beneficiaries.

Tax benefits:

It also provides tax advantages in order to manage the tax of the family unit. The distribution of trust means it lowers the incomes for the purpose of minimizing the tax. It is the most helpful thing for the adult children of the family who are studying. It is also beneficial for older parents who get retired and are likely to be in a low tax bracket.

Retirement savings:

The planning for retirement savings is another best benefit of family trusts. Its flexible structure gives an incredible opportunity to accumulate wealth which can supplement superannuation savings.

The family trust in Australia also provides flexibility to invest in property. Additionally, it is also helpful in the protection of vulnerable beneficiaries who may make unwise spending decisions.