Set up trusts

A trust is a legal arrangement where assets, such as property or money, are managed and distributed for the benefit of individuals or organizations. Trusts can provide financial and legal protection, offer tax advantages, and allow for flexibility in terms of asset distribution.

Anyone over the age of 18 with the mental capacity to understand the implications of setting up a trust can establish one.

They are often managed by a trustee, who is responsible for overseeing the trust's assets and carrying out the wishes of the person who established them.

The most common types of trusts encountered in asset protection and estate planning in Australia are:

Discretionary trust: Discretionary trusts are a popular way to deal with taxes, and they can be very flexible in terms of how to share income among family members to maximize tax savings. Here, the trustee has complete flexibility and authority to change the proportions that are distributed among beneficiaries.

Fixed Trust: The fixed trust is a type of estate planning where the beneficiary receives set proportions, usually based on terms mentioned in your will or instrument. Here, the trustee does not have any right to change this proportion unless specified while creating it.

Unit Trust: In a unit trust, the trust property is split into several defined shares known as units. Here, the beneficiaries subscribe for units in much the same way as shareholders subscribe for shares in the company. This trust is commonly used for people to ‘pool’ their money together and make investments.

Hybrid Trust: A hybrid trust combines elements from both discretionary and fixed trusts. This type of trust allows for more flexibility than a fixed trust, while also providing some asset protection benefits to the beneficiaries.

A trustee is a natural person or a company that holds legal title to the trust property and owes a duty of care to the beneficiaries with respect to that property

A settlor, also known as the creator, is the individual who has the responsibility to establish the trust and transfer property to a trustee.

Beneficiaries are the person, object, or purpose that is designated to receive the benefits of trust property. The benefits can take the form of an income distribution, a capital distribution, or a combination of the two.

To ensure that your trust complies with all federal and state laws, you will need to register for the following:

Australian Business Number: The trustee needs to register an ABN for the trust if the trust is planning to set up business in Australia.

Trust File Number (TFN): A trust must have its own TFN to use while filing its annual tax return. The trustee can apply for it on the ABN application form.

Goods and Service Tax (GST): If the trust is carrying on business and its turnover is $75,000 or more, the trustee must register for GST. For non-profit organizations, the registration threshold is $150,000.

There is no straightforward answer to the question of how much it costs to set up a trust account in Australia.

This is because the fees and other associated costs will largely depend on various factors, including the type of trust you are creating and whether or not you are using a professional trustee to help manage your account.

Although setting up a trust requires both time and money, many benefits can be gained from the process, such as asset protection, tax advantages, and estate planning. Therefore, it is important to consider all the factors before making a decision.

Also, it is recommended to consult with an accountant or legal professional to get an accurate estimate of what your specific trust setup might cost.

Setting up a family trust in Australia can provide a range of benefits. Here are a few of them:

Cost-effective: Family trust is a cost-effective way to manage your assets, as it is relatively easy to set up and maintain compared to other forms of asset structures.

Asset Protection: Setting up a family trust can help protect your family’s assets from creditors and legal issues.

Minimizing tax: Helps minimize the tax liability across the family unit, by distributing income among different members.

Flexibility: The trust provides great flexibility to families when it comes to dividing tax burden and safeguarding family members and assets.

Planning for retirement saving: The flexible structure of the trust allows you to accumulate wealth that can supplement superannuation or retirement savings.