Investors often look to structure the investment ownership in a manner that would result in the lowest amount of tax payable. For example, if you are a member of a couple one way to do this is to invest in the individual’s name who is on the lowest tax bracket. Another way to do this is to invest in what is known as a family trust. 

A key benefit of a family trust owning the investments is that the trustee of the family trust can distribute income earned by the trust in any way they see fit. This often involves distributing income to a lower-income earning spouse, child, or grandchild, for example, that would reduce the level of income tax payable.    

The benefits do not stop there. Family trusts provide asset protection, with the legal owner of the assets being the trust, not the individual. Family trusts are also accommodating with regard to succession planning and the intergenerational transfer of wealth.     

There are other considerations to keep in mind before establishing a family trust. There are setup costs that are incurred to establish the trust.  There are also ongoing annual accounting fees for the lodgement of an annual tax return. A trust cannot allocate losses to beneficiaries, therefore if investment losses are anticipated then this should be carefully planned.  

There is no doubt family trusts can offer considerable advantages. If you think a family trust may provide a benefit to your situation, I encourage you to contact your adviser at Hewison Private Wealth and your taxation accountant to discuss the benefits to your specific situation.