Company Beneficiaries and Trustees for Family Trusts

Family trusts are one of the most popular forms of business structures. The advantage of having a family trust is that the profits never leave the trust. The beneficiaries are nominated at the year end and profits will be distributed to them, but these will be promptly reinvested in the trust so that money never goes outside the trust.

Nominated beneficiaries are usually the younger family members who fall in the low income tax bracket. This will help in securing tax advantages in the form of lower tax payments by them.

Nowadays there is an overriding trend to appoint companies as beneficiaries. This is being done mainly by family trusts where all the members belong to the high income bracket and have to pay taxes at higher rates. Nominating companies as beneficiaries in such cases will help secure tax payments at a lower flat rate of 30%, thus providing some savings.

Companies are also being popularly appointed as trustees of the family trusts. This provides the benefit of spreading management responsibilities amid the board of directors of the company rather than a single person handling the management of the trust. It also gives asset protection from company/individual debts as the assets are owned in the trust business name.