What is a Trust and Why You Should Have One blog image

What is a Trust and Why You Should Have One

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A trust is an asset-holding entity that is managed by an obligated person or entity (trustee) to maintain the assets for the benefit of its beneficiaries. Trusts can provide you with crucial asset protection, estate planning along with taxation benefits.

Let’s consider some of its advantages in more detail.

Intergenerational transfer of wealth

It allows the owner of a trust to set certain conditions which can be very helpful if a beneficiary is likely to be financially unreliable.

In addition, a trust will allow you to distribute income to beneficiaries who are on lower tax rates. However, penalty rates may apply for distributing income to children under the age of 18.

You can control who of your beneficiaries will receive income and when while they do not have control of the assets.

Shield your assets from creditors

Having a trust allows business owners to shield their assets from creditors and potential litigants. In the event that they are unable to meet their business responsibilities, a trust will generally protect those assets.

Asset protection

As mentioned earlier, having your investment assets under a trust will prevent you from potentially putting at risk all your assets that are under your name. Setting up a trust for your investments will provide greater protection than a will. Any legal action taken by a discontented family member or a friend who wants to dispute your estate may do so while the trust would generally fall outside the Estate.

Taxation benefits

Another benefit of having a trust is that they are very flexible for tax purposes. Trusts are very useful means for holding capital-appreciating assets such as property or because control of a trust can be transferred without attracting capital gains tax or stamp duty.

Related:  Government to reduce bankruptcy to one year

A trust ensures that only control of the trust is transferred rather than transferring the individual asset, so using a trust in estate and succession planning is very effective. In addition, the net income of a trust is generally taxed as income of an individual.

Having a trust can help protect your estate or your beneficiaries’ estates and can save you a lot in tax. We here at Chan & Naylor have developed the Chan & Naylor Property Investor Trust® (PIT®) and some of its features are:

  • No vesting date, i.e., our trust does not vest (expire) after 80 years.
  • We have a family lineage clause which offers protection of the assets to the family lineage (blood relatives only) in case of a bankruptcy or family court dispute
  • Hold multiple assets controlled by various different family members

To know more about the features of the Chan & Naylor Property Investor Trust®, click here, or contact a Chan & Naylor accountant near you, and we’ll be more than happy to help.


Aside from our PIT®, have a look at our other accounting and advisory services that we do to help you achieve greater success.

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Chan & Naylor Group has nationwide offices in North Sydney, South West Sydney, Sydney, Pymble and Parramatta in New South Wales, Melbourne, Moonee Ponds and Hawthorn in Victoria, Brisbane and Capalaba in Queensland, and East Perth in Western Australia that can assist you with getting a trust as well as any other business or personal tax enquiry that you may have. Contact us today.
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