5 things you
need to know
- Many business people set up discretionary trusts to protect assets and increase their tax efficiency. A discretionary trust gives the trustee discretion over what income is paid to what beneficiary. A discretionary trust can be an effective structure for achieving both of these goals.
- Setting up a discretionary trust doesn’t need to be overly complicated. You will need to select a trustee, then you’ll need to have a trust deed drafted, the trust will need to be settled, the trustee(s) need to sign the deed, and then stamp duty must be paid (if applicable).
- Stamp duty is only payable in certain states. Your lawyer or accountant will be able to advise you on whether stamp duty is payable in your circumstances.
- Once you’ve set up your trust you will have ongoing taxation obligations. Make sure you work with a good accountant to ensure you’re keeping up to date with those obligations.
- Finally, make sure you only set up a discretionary trust if it makes sense for your particular circumstances. It may not make sense for you to set up a discretionary trust — seek advice before making any decisions.