Major Benefits to Have A Family Trust?

A trust or family trust is well known for its name only. Other than professional, the majority taxpayers do not really understand why they need a trust. The trust can be extremely complex system or just by itself.

Today, let us only focus on TWO major benefits when having a family trust.

Tax Efficiency

As we all know, the higher income under a single individual name, the higher marginal tax rate applies in the current tax system. Due to special levy imposed, the top marginal tax rate is close to 50%. A family trust may potentially provide a better solution by directing income and capital gain to different “channels” (beneficiaries) that have lower tax brackets. This has been a very common and efficient practice for households and business owners for many years. For example, in a Mum/Dad family business, rather than allocating all business and investment profits under husband name, the couple can equally share the distribution via the family trust vehicle to potentially reduce both their tax brackets. The above is powered by the trust law that trustees have their discretion to execute the distribution in the preferred portion and amount to beneficiaries.

Asset Protection

Although the trust is still controlled by you (trustees), the assets are in fact owned by the trust. If there is a corporate trustee in place, any dispute or lawsuit to individual names or other business entities, creditors are generally unable to claim anything against the trust assets.

Therefore, if you are risk taker or expose to any business/personal risks in the family, it will be a smart and wise decision to place your investments, such as real estate properties, cash, shares, etc. in different entities, such as a family trust with a corporate trustee to isolate all risks. If you have any queries or would like to take the above-mentioned benefits, please do not hesitate to directly contact Mr. Wen Wei, who is the principal of the Department of Tax and Business Services at “We Do Tax” at 0472 66 8888 or