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Company Solutions Ltd. is dedicated to providing you the correct type of trust. First you complete a questionnaire, which is then generally followed by an interview. The information you give us then enables us to specify the most advantageous type of trust for you, depending on the function that you need your trust to perform.
There are several types of family trust, including:
Traditional style of family trust - non trading
Often described as 'passive trust'. This type is normally used where an asset such as the family home or holiday home is transferred primarily for asset protection.
Traditional style of family trust - income producing
Used to transfer income earning assets such as rental properties, share portfolios and so forth. The aim is to protect assets and well as spread income to beneficiaries.
These were used particularly by people endeavouring to avoid estate duties. Under the estate duty legislation a settlor of a trust could not get a benefit from it. Thus two trusts were formed. One by the husband as settlor and the other by the wife as settlor. Each settlor would include the other spouse as well as their children as beneficiaries. Each trust can own its own separate property, and/or say 50% of these assets, or form a partnership to own the total assets as partners. As estate duties were abolished in December 1992, there have been fewer of these types of trusts formed. Alternative trusts, structured differently now cope with any difficulty arising from Estate Duty being reintroduced. Like the other varieties of trusts these mirror trusts can be still be effective given the right circumstances.
Trust as a shareholder of a trading company
This alternative provides many advantages, however the income needs to streamed to the beneficiaries via the company dividends. This results in tax being funded at the higher company rate until refunds are achieved by those beneficiaries on the lower rate of tax.
Trading trust with a corporate trustee
As the name implies, this type of trust is used for operating a trading business and is successful for income splitting. This trust has as its sole trustee a limited liability company. The persons who would normally be trustees in their own name in a trading trust instead of taking these positions personally, usually become directors of this trustee company. Thus a company and trust structure are linked. The advantages of full limited liability protection and the ability to trade with the company using a name which is completely different from the trust, is achieved. For many, this will be the preferable type of trading trust.
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