What is a Trustee?
A trustee is an entity or a person who takes care of assets for others, called beneficiaries. The trustee is responsible for managing the assets of the trust in the best interests of the beneficiaries. They must adhere to the trust deed and relevant laws,
Types of Trusts
A family trust is a legal way to hold and manage family assets or run a family business. Family members use this trust to have financial security and flexibility.
One of the main reasons why people choose to set up a family trust is for tax planning purposes. Moving assets or business operations to a family trust can possibly create asset protection or lower taxes. This can result in significant tax savings for the family as a whole.
Unit trusts are like shares and let people own a certain amount of units for investment purposes. These units represent the individual’s ownership of the trust property. When someone buys units in a unit trust, they are basically purchasing a part of the trust’s assets.
Professional fund managers typically manage unit trusts and make investment decisions on behalf of the unit holders. Fund managers collect money from different investors and invest it in a mix of shares, bonds, and real estate. The aim is to make money for investors by investing in various assets that can increase in value over time.
Unit trusts allow individuals to invest in a variety of assets, even with a small amount of money. Individuals can access a variety of investments by joining forces with other investors. These investments may have been out of reach for them alone.
A discretionary trust is a legal arrangement. The trustee determines how to distribute the money and assets in the trust to the beneficiaries.
People can lower their taxes by moving assets or business operations into a family trust. They can also benefit from tax breaks. A discretionary trust grants the trustee the power to determine who receives what. This is different from other trusts that have a predetermined plan for distributing assets.
People use a discretionary trust to safeguard assets and exercise some control over their distribution. The trustee can protect the assets from creditors, lawsuits, and financial risks by deciding who gets the money and when. This is helpful when the beneficiaries are not good with money or are at risk of losing their wealth.
The Role of a Trustee
Trustees are responsible for:
- Asset Management: Managing the trust’s assets prudently and productively.
- Tax Compliance: Lodging trust tax returns and ensuring compliance with the Australian Taxation Office (ATO) regulations.
- Legal Duties: Adhering to their duties under trust law and the terms of the trust deed.
- Record Keeping: Maintaining accurate records and accounts of the trust’s activities.
Why Choose a Trustee Structure?
A trustee structure can offer several advantages, including:
- Asset Protection: Trusts offer a significant advantage in terms of protecting the assets held within them. When you place assets in a trust, the beneficiaries no longer consider them personal property.
- Tax Effectiveness: Trusts also offer tax advantages that can help minimise overall tax liability. By strategically distributing income from the trust, beneficiaries can potentially reduce their tax burden.
- Establishing trusts can provide funds to individuals in lower tax brackets. This helps reduce the overall tax liability.
- Trusts are important for transferring wealth and managing assets according to the grantor’s wishes across generations. A trust gives the person giving assets control over when and how to give them to the recipients. This allows for an efficient transfer of wealth, minimising potential conflicts and disputes among family members.
- Trusts give control over assets even after the person who created the trust dies. The trust document can have instructions for how to manage and give out the assets. This ensures that we preserve the grantor’s legacy and use their assets in accordance with their intentions.
- Trusts are a good way to plan for the future. They protect and manage assets, giving people peace of mind.
IJ&EA Tax Accounting: Your Trust Management Partner
At IJ&EA, we specialise in setting up and managing trustee structures that are compliant with Australian tax laws. We offer the following services:
- Trust Formation: Guiding you through the process of establishing a trust.
- Tax Planning: Utilising trusts for tax-effective distribution of assets.
- Compliance and Reporting: Ensuring your trust meets all regulatory requirements.
- Advisory Services: Providing expert advice on trust management and operations.
Let IJ&EA be your trusted partner in navigating the complexities of trustee structures. Contact us today to schedule a consultation and learn how a trust can benefit you and your beneficiaries.