What is a Discretionary Trust?

A discretionary trust is a legal agreement between different parties in which the trustee is given the power/discretion to decide which of the beneficiaries are to benefit from the trust. A discretionary trust can help protect family assets and enable income and capital to be spread among members of a family to minimize tax.

InfoTrack's Discretionary Trust is prepared by LegalVison, specialists in corporate law and Australia's leading online legal services provider. Our package consists of:

  • Your Discretionary Trust Deed is customised based on your answers in the application process
  • Trust Schedule
  • Memorandum of Wishes (If required) with instructions
  • Minutes for corporate trustees (If required) with instructions
  • Documents are delivered in PDF format.

Company registration for $529*

InfoTrack offers you a streamlined, fast and efficient way to complete, execute and lodge documents involved in registering and incorporating a company without leaving our system. We have links to ASIC which means you can register/incorporate a company nearly instantly from the InfoTrack system at the same time you set up your discretionary trust deed.

*Limited time offer.

Why do we need a trust deed?

Trusts are created by a legal document called a “trust deed” prepared by a solicitor which outlines the purpose of the trust, the rights and obligations of the trustees and beneficiaries, powers of the trustee, and identifies various parties such as initial Beneficiaries, Trustee(s) & Appointor

 

Discretionary Trust FAQs

Q. What is a discretionary trust?

A discretionary trust is a legal agreement between different parties in which the trustee is given the power/discretion to decide which of the beneficiaries are to benefit from the trust. A discretionary trust can help protect family assets and enable income and capital to be spread among members of a family to minimise tax.

 

Q. Can a sole beneficiary also be a sole trustee?

If one person is to be the sole beneficiary and sole trustee then the trust is invalid, as a person cannot hold an asset on trust for their own benefit. The InfoTrack Trust deed, however, allows for many people related to the primary beneficiary to also be named by the trustee to receive benefits.

If you are in the situation where only one person is named as the trustee and beneficiary in the deed it could be worthwhile considering a corporate trustee. If you are in this situation we recommend discussing your needs with your accountant or lawyer for professional advice.

 

Q. How do I set up a family trust with a corporate trustee?

Setting up a family trust with a corporate trustee is straightforward with InfoTrack. You perform the steps in the following order:

  1. Register a company as your corporate trustee if it isn't already registered. Please note that as this company does not trade it will not require an ABN for itself.
  2. Form your Discretionary trust deed, during the order process you will be asked for the name and ACN of the new company.
  3. Obtain an ABN for your trust at www.abr.gov.au, this will be in the name of your trustee company acting as trustee for your trust.
  4. Perform any necessary stamping of your deed.

 

Q. What are family trust elections?

A discretionary trust may make a family trust election, this is an optional declaration made to the Tax Office, notifying the Tax Office of the desire to be treated as a 'family trust' for taxation purposes. The family trust status with the ATO provides simplification of the tax rules which apply to the trust.

As part of the election, the trustee chooses a particular (test) individual around whom a family group is formed. This family group sets the boundaries around who the trustee can distribute without adverse tax outcomes. As a result, the trust may become less flexible and if distributions are made to someone outside the test individuals family group they can be subject to Family Trust Distribution Tax. This is basically the maximum individual tax rate plus the Medicare levy, currently 49%.

 

Set up your Company Trust today

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