What are the benefits of family trusts?
Baby Boomers are setting up Family Trust Funds to help next generation family members.
But what are the benefits of family trusts?
Baby Boomers in Australia are in a unique position compared to previous generations, they are home owners in a rising property market, with superannuation and other investments to support them in their retirement.
On the opposite end of the spectrum are their children and grandchildren. They are just starting out in their careers and with young families to support, who are unable to get a financial step ahead or gather enough money for a house deposit.
In these circumstances, it is entirely understandable that the “Baby Boomers” wish to help out their next generation family members financially; and the best way to support these next generation family members, is to set up a “Family Trust” with the next generation family members named as beneficiaries of the “Family Trust”.
Setting up a “Family Trust” to hold assets is a common practice in farming families. Where the main asset, the family farm will pass down through generations of the family. “Baby Boomers” are now realising the advantages to setting up a “Family Trust” to hold their assets and use these assets for the benefit of their next generation!
One of the main benefits of setting up a “Family Trust” is that the Trustee can direct how the income from the assets in the “Family Trust”, will be distributed between the various family members. This allows the Trustee, to direct the income for the best tax minimisation for the beneficiaries, particularly for beneficiaries who are under the tax free threshold, such as grandchildren at university.
Another benefit of setting up a “Family Trust” is the ability to purchase property and allow beneficiaries to reside in the property. This protects the property from a potential family law claim, in the event that, the family member’s relationship, or marriage, breaks down as well as allowing the Trustee to control the property in the event that, circumstances in the family change in the future.
The ability to help out and assist the younger generation financially, is what is driving the trend towards setting up “Family Trusts” for the benefit of the next generation.
If you are a “Baby Boomer” and considering how best to use your accumulated wealth, for the benefit of your family, then you need to consider setting up a “Family Trust”. This includes consideration of the beneficiaries you want to be included in the Trust, who will be the Trustee and how you want the income from the assets in the “Family Trust” to be distributed.
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