Trusts 101

Trust, Trusts, Business Advisors, Rural, Agriculture, Synergy, Synergy Accountants, Accounting, Toowoomba

June 12, 2014

What is a trust?

A trust is an obligation imposed on a person – a trustee – to hold property or assets for the benefit of others, known as beneficiaries. A trust deed is a document that spells out the rules that you want followed for property, cash, stocks or anything held in a trust (or trusts) for your beneficiaries.

Trusts can be established for many different reasons and benefits, including:

With the numerous types of trusts available, the difficult decision lies in ensuring the most beneficial trust for you or your company’s specific situation. The three most common trust structures are fixed trust, discretionary trust and hybrid trust.

Types of trusts

A fixed trust is one with pre-determined and ‘fixed’ decisions regarding the share the beneficiaries have in assets and income. This form of trust leaves no leeway for the trustee to vary the income distribution and ensures the decisions you have made are final.

A discretionary trust provides the trustee with ‘discretion’ over who receives distributions from the trust, and to what percentage. The decisions made must reflect the terms laid out in the trust deed.

A hybrid trust has both characteristics of fixed and discretionary trusts.

Synergy Accountants recognise the importance of preserving your trust to establish long-term financial security for yourself and all trust beneficiaries. Synergy Accountants will walk you through every step of setting up a trust, ensuring your personal and business assets are protected and identifying any tax planning opportunities that may be present.