A trust is often chosen as the business structure when more than one family is involved in running a business.
A trust is formed when a business is transferred to a trustee to:
- hold the assets
- run the business
- distribute income to beneficiaries
- observe the provisions in the trust deed.
Advantages and disadvantages
Advantages: | Disadvantages: |
- limited liability is possible by appointing a corporate trustee
- more privacy than a company
- flexibility in distributions to beneficiaries
- trust income is generally taxed in the hands of individuals.
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- more complex structure
- expensive to establish and maintain
- problems can be encountered when borrowing
- powers of trustee are restricted by the trust deed.
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You should consult your solicitor and accountant in considering whether a trust is an appropriate business structure.
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