What’s in it for you? A family trust and your business - Part II

You may structure your family trust around either a discretionary trust or a unit trust. Although a discretionary trust has traditionally been known as a ‘family trust’, the Trustee is given freedom to decide whether the beneficiaries receive any benefits, and if so, how much. 

However, a unit trust means that each beneficiary of the trust is to gain a set ratio (‘units’) of the trust property. These are the ‘unit holders’. Unit trusts can be helpful in joint ventures, property and investment trusts, where an easily transferable interest in the trust is vital.    

If the members of your family can determine how much of an interest they wish to invest (therefore determining how many ‘units’ to hold), a unit trust may be the best option. 

Alternatively, a hybrid trust is a mix of the two types of trust. The income and capital can be distributed partly through the Trustee’s discretion, and partly through the proportion of units held. 

If you have further questions, please contact us at frank@franklaw.com.au

This is not legal advice. 

Written by Tim Cargill & Zdenka Marinov and edited by Andrew Graham.