How to use a Family Trust to run a business?

[pink.moon]

Hey, does anyone know the steps to set up a trust? If i would like to keep my business assets separate from the business and divide the business income between each family member, do i need to create 2 trusts? One to hold my assets and one to run the business.

Thanks. Hope someone can help. Hoping to learn more about trusts before setting one up with my accountant.

[Adam Randall]

This is how we setup ours:

1) Picked up phone
2) Asked accountant to set it up.
3) Paid about $800 for company and trust setup.

Things like that do require expertise, it sounds like you already know what you want, the technical details should probably be left up to the accountant.

There are some books on recommended setups, from memory I think holding your company within a trust was one of the safest ways to run things, but thats coming from someone who has trouble counting to 10 unless I am bare foot or wearing sandles.

[KarenC]

I do not have a trust nor do I know anything about them, but I found these links really helpful in understanding them.

Written by Nick Renton AM who is an Australian authority on trusts and many other law matters.
This is the link to the page about family trusts
http://users.bigpond.net.au/renton/942.htm

http://users.bigpond.net.au/renton/ (main website)

http://users.bigpond.net.au/renton/101.htm (about Nick Renton)

You have to scroll down a lot of the pages, but there's a wealth of information there.

[Hugh Thyer]

Make sure you check out the Personal Services Income rule.

If you're the one earning the money, the money will have to come to you. You can't distribute it to anyone you like under certain circumstances.

Get an accountant to advise you properly.

[Dardee]

I run my business through a family trust and have a company as the trustee. The benefits are flexibility with distributing the income but you do need to be wary of the personal services income rules. If you are running a genuine business and have a number of clients/customers then you are probably ok but it is best to speak to an accountant.

[Angus]

In general, it's a good idea to separate business assets and the trading entity into different trusts. Having a company trustee as you have already done is also a good idea for asset protection. Whether you can distribute income flexibly between family members will depend on the nature of your business. You need to seek professional advice so your own circumstances are fully taken into account.

Angus Morrison
CEO
Lift Business Growth Systems
Level 1, 290 Coventry Street
South Melbourne VIC 3205
www.liftbusiness.com.au
03 9092 9424
0447 407 576

ABN 99 065 724 852

Liability is limited by a scheme approved under Professional Standards Legislation.

[The Cafe Ninja]

My accountant has helped me with all of this and I'm happy to recommend him - www.yunari.com.au. His name's Darren Cowell.

[yunari1]

Pink Moon:
Generally best approach is to house business assets in a trust and run the operating business in a separate company structure.

You can link the two entities such as having the trust own 100% shares in operating company. But that will depend on your particular cicumstances as to whether that is appropriate.

Best to get an accountant setup structures, but you can use someone like Reckon Espreon for "off the shelf" service, such as trust deeds, company shells.. I find them excellent.

Btw I am a chartered accountant and tax advisor.

Cheers,
Darren
www.yunari.com.au

[ruselrones]

Setting up a family trust can give a small business owner a multitude of planning opportunities with potentially large advantages......Dividends can be paid from the family business corporation to the trust and these amounts can flow out to family members in need......

[saoirse]

Dont underestimate the importance of a small business / asset protection lawyer.

Your accountant is the place to start to advise you on the most appropriate structure but i'd always recommend taking legal advice on the structure itself rather than relying on your accountant to set it up for you.

Ask your accountant if he works with or knows a lawyer who can prepare the necessary trust deeds, etc. Accountants might be able to do it for you but they might also not be up to date on all the legal aspects.