Discretionary trusts are a multi-purpose structure that many people can use to their advantage for a wide range of business activities. You can use trusts that have a trading function, hold shares in an operating company, or hold personal assets. In all cases, trusts are useful because they can offer benefits such as asset protection, income distribution, and minimizing tax liabilities. However, it is important that you properly establish a trust. LegalVision lawyers receive a variety of questions about trusts. Therefore, this article answers the most frequently asked questions about trusts. If the trustee dies, upsets you or can no longer act as trustee, the assignee is the person who provides a replacement. In addition, the appointee is also responsible for determining whether the trustee is compensated for assisting in the management of the trust. The company has offices in New Delhi and a representative office in Hyderabad. The firm`s partners provide clients with legal advice and expertise in a variety of practice areas and verticals across the country. Founders can use a discretionary trust to own their shares in their startup (rather than owning them personally), which makes sense for several reasons.

Yes, a trustee can be one of the beneficiaries of a trust. For example, a person could set up a trust, appoint themselves as trustees and distribute income to their family. However, a trustee cannot be the sole beneficiary of a trust. This is because they would legally own property for their own benefit, which is problematic from a legal point of view. The answer depends on the state or territory in which you have established your trust and where you intend to own property or run a business. For example, in New South Wales, there will probably be a stamp duty of $500 for the creation of the trust. Beneficiaries are not entitled to fiduciary distributions. Rather, there is a “mere expectation” that the trustee will be able to distribute income if he or she wishes. Hence the term “discretionary” trust. Yes, but you should be aware that if a trustee distributes income to someone under the age of 18, they will be subject to significant tax. The disadvantages may be that the trustee can stop distributions to a particular beneficiary at any time. Similarly, there is little a beneficiary can do to change this rule.

This can be problematic if a dispute arises with the trustee, such as a family dispute. This is an important reason why you should be very careful when choosing a fiduciary. A discretionary trust is an asset-ownership arrangement that some business owners and investors have set up to support asset protection or tax planning. Discretionary trusts have the following advantages: Beneficiaries are not entitled to a portion of the trust`s income. You will only receive a benefit if the trustee exercises his or her discretion and distributes the proceeds. Therefore, a person`s beneficiary status does not result in a significant gain or ownership interest in the trust. As there is no right to ownership, you will not be subject to any tax consequences if you do not receive a distribution. We have been working with Legal Vision for several years and have found it a pleasure to work with them.

The team is knowledgeable, approachable, has a fast turnaround time and offers excellent value for money. What more could you ask of your legal team! A settlor is a person who first invests the property in the trust. The act of placing the first property in the trust is called a settlement or gift, and usually for a nominal sum of $10. The settlor has nothing to do with the trust and does not have to benefit from it. Typically, you can hire a lawyer, accountant, or friend. In general, yes. Since the trustee is the rightful owner of the trust, you should consider starting a new business. Therefore, there is no risk that the company will have any past liabilities that could affect the trust.

For example, liability may arise if you use a business that: Although a corporate trustee provides additional protections (especially limited liability), it requires you to start another business and increase your installation and maintenance costs.