Are you considering establishing a family trust in Australia but are unsure of where to begin? Believe us when we say that we are aware of how challenging it can be, which is why we have compiled all the information you require to guide you through the procedure. Before making any decisions about creating a trust of any kind, always consult with an experienced professional. If you have any questions, give BluCity Tax accountants a call.
Describe a trust
Although a trust is technically a relationship rather than a legal entity, for the purposes of tax administration, trusts are recognised as taxpayer entities. Depending on the situation, trusts are typically utilised for either business or investing goals.
A family trust: what is it?
Family trusts are discretionary trusts that are typically established to:
- Run a business.
- Protecting your assets.
- For tax reasons.
How to create a family trust in Australia
As a general guide, the following list of actions should be taken in order to create a family trust. Trustee(s)
Finding a trustee is probably the most difficult step in creating a family trust. A trustee can include a variety of people, such as:
- Banks or corporate advisory firms are examples of corporate fiduciaries.
- Professional person, such as a lawyer, accountant, or investment advisor.
- Non-Professional Person, such as a relative.
The second step is to identify the beneficiaries of the family trust. This step is crucial because beneficiaries have a right to trust income or other trust assets with respect to the family trust.
The next step is to create a discretionary trust deed that is enforceable in court. Always consult a knowledgeable professional about this particular stage because trusts can be fairly complex and unique to your personal circumstances.
The trust deed must then be signed by a “settlor,” who also “settles” the trust’s assets. This procedure establishes the trust deed for the benefit of the beneficiaries and typically calls for the settlor to provide the trustee with a small sum of money.
It’s now time for the other signers as well! The trustee(s) must hold a meeting after the settlor signs the trust deed to approve their appointment as trustee(s) of the trust and accept to be bound by the conditions of the trust deed.
With respect to your family trust, stamp duty may vary depending on where you live. To ensure you meet all requirements properly and on time, always consult the appropriate authorities in your state or territory regarding stamp duty amounts, payment procedures, and deadlines.
ABN and TFN
Following the creation of the family trust, it is necessary to obtain an Australian Business Number (ABN) and a Tax File Number (TFN). If unsure, seek out expert advice!
Open a bank account Opening a bank account is the last action in the trust creation process. In order to serve as a trustee for the trust, this account must be opened in the trustee’s name. Before any additional deposits or transactions are done, the settlement money should be the initial sum to be deposited.