If you have or are considering acquiring assets, have or are considering purchasing or setting up a business, have or are considering marrying or having children, then you should consider how best to structure your affairs. Your asset structuring should be reconsidered periodically especially when you are looking to alter some aspect or your personal or business affairs.
A company is a separate legal entity to you. There is a cost to establish and maintain a company. The initial costs of establishing the company will be about $1,200.00. You must then on an annual basis prepare and file Australian Securities and Investments Commission ('ASIC') returns and tax returns. You must keep company records of meetings of directors and shareholders and registers of officers and members of the company. Companies are taxed at a different rate to individuals.
A trust gives you flexibility as to who can receive income and capital owned by the Trust
The Trustee can be one or more individuals or a company.
The Trustee's actions are usually controlled to a large extent by the person who set up the Trust (called 'The Appointor'). He or she can remove the Trustee and direct the Trustee to do certain things.
Discretionary Trusts can be established for a family and/or a business. The trustee has the discretion as to how to apply and distribute income and capital.
Unit trusts are usually used for business ventures. Units in the trust are like shares in a company. They govern the unit holders entitlement to income and capital. - in accordance with their unit holding and the total number of units issued.
Where you are in financial difficulties when the structure is set up, it may be able to be undone if it is later challenged by your trustee in bankruptcy as having been done with the intention to defraud your creditors (i.e. take your assets out of your control so that they cannot be used to pay your creditors).
Structure like trusts and companies should not be set up without careful consideration by you in consultation with your lawyer, accountant and financial planner as to what is best for your needs (now and in the future).
This article is general in nature
and for information only. It should not be acted upon without obtaining
specific legal advice.
©Anne Hodgson & Co Lawyers,
Tel: 03 9578 7444 Fax: 03 8677 2962 Email: firstname.lastname@example.org