When considering an appropriate Trust structure it is important to properly identify the type of assets being settled. Generally assets should be held in one of the three different types of Trust:
1. Family Trusts (being individual, couple or parallel)
This is a passive Trust whose main purpose is the protection of a family lifestyle and retirement assets.
These assets could include:
- Family Home
- Holiday Home
- Retirement Savings
- Long Term Investment Properties
In this type of Trust the Settlors would normally be the Trustees together with an Independent Trustee, with themselves and their family members (only those related by blood) as Discretionary Beneficiaries.
2. Business Trusts
This is a more active form of Trust. The asset would normally be the majority of shares in active Trading Companies. In this type of Trust the Settlors would be the Trustees together with an Independent Trustee and again themselves and their family by blood as Discretionary Beneficiaries. Income from the companies would be paid by way of a dividend to the Trust. The Trustees would normally disburse this income amongst the beneficiaries or retain it within the Trust. This decision we recommend would be made in conjunction with the Trust's Accountant.
Whilst asset protection is still a function of this Trust the major motivating factors in the settlement of these Trusts would be efficient tax planning and business succession issues.
Due to the more active nature of these Trusts we generally prefer to reduce the associated risks by ensuring that these assets are held separately from the assets normally held in the Family Trust.
3. Investment Trusts
This is a special purpose Trust to be used where direct ownership of particular assets could be detrimental to the overall interests of the family. Normally family members would not have direct involvement as either a Settlor or Trustee of the Trust. The Beneficiary of these Trusts would normally be other Trusts created for the benefit of the family and so any distribution of funds intended to be used for the family would have to pass by way of distribution via the intermediary Family Trust.