Blended families and step-families are very common these days.
Business & Corporate: Your family trust is probably affected by the 'foreign persons' surcharge’. Your Trust deed should be reviewed
Family trusts are often created for the purpose of protecting assets and minimising tax liabilities. However, the Office of State Revenue (OSR) has recently made a ruling which will have the opposite effect, namely increasing potential tax liabilities for the beneficiaries of a Family Trust. Family Trust Deeds which include ‘foreign persons’ in the list of beneficiaries are now liable for a Land Tax and Stamp Duty surcharge on sales or purchases of NSW residential land.
As seen in the previous post on Trusts in general, we saw the different roles played by the Settlor, the Trustee and the Beneficiary. We also saw that a Trust is governed by a fiduciary relationship between the Settlor and the Trustee wherein the Settlor relies on the good faith of the Trustee.
Not only can a trust decrease your tax but it can cover your assets against losses from divorce, bankruptcy or the claims of creditors. If drafted properly, it can act like a wall that comes down to protects the individuals’ property.
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.