What are the benefits of Discretionary Trusts?
- Income Splitting: Discretionary trusts allow income to be distributed among beneficiaries in a tax-efficient manner, potentially reducing the overall tax burden.
- Capital Gains Tax (CGT) Benefits: Trusts can access the 50% CGT discount if assets are held for more than 12 months.
- Protection from Creditors: Assets held in a discretionary trust are generally protected from creditors of the beneficiaries.
- Family Law Considerations: Trusts can provide a layer of protection in family law disputes, helping to safeguard family wealth.
- Control Over Asset Distribution: Trusts allow for greater control over how and when beneficiaries receive their inheritance.
- Succession Planning: They facilitate smooth succession planning, ensuring that assets are managed and distributed according to the settlor’s wishes.
- Adaptable to Changing Circumstances: Discretionary trusts can be tailored to adapt to changing family and financial circumstances.
- Variety of Beneficiaries: They can include a wide range of beneficiaries, providing flexibility in distribution.
- Private Arrangements: Unlike wills, which become public documents, the terms of a discretionary trust remain private.
- Managing International Assets: Trusts can be used to manage assets in multiple jurisdictions, providing tax and legal benefits across borders.
How we can help
What’s involved in Discretionary Trust Advice?
- Establishing the Discretionary Trust: Tailored solutions for setting up your trust.
- Specialist Financial Services Advice: Aligning with your financial goals and estate planning objectives.
- Establishing a Corporate Trustee (if required): Assistance in establishing a corporate entity to serve as trustee if advantageous.
- Preparing Discretionary Trust Tax Returns and Financial Statements: Ensuring compliance and optimising tax positions.
- Preparing Beneficiary Tax Returns: Managing tax returns for beneficiaries, considering distributions and personal income tax.
- Provision of Advice on Tax-Efficient Discretionary Trust Distributions: Strategic advice on making tax-efficient distributions to beneficiaries.
Advice on Complex Discretionary Trust Matters
- Family Trust Elections and Compliance: Guidance on family trust elections and ensuring compliance.
- Analysis of Reimbursement Agreements/Arrangements: Assessing their tax impact.
- Guidance on Anti-Avoidance Rules: Involving tax-exempt beneficiaries.
- Advice on Winding Up or Vesting a Trust: Process and considerations for winding up or vesting a trust
Advice on Cross-Border Issues
- Residency Status of Foreign Discretionary Trusts: Determining residency status and tax implications.
- Tax Consequences for Non-Resident Discretionary Trusts: Distributing to Australian tax resident beneficiaries.
- Tax Implications for Resident Trusts: Distributing to non-resident beneficiaries.
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