The ATO is cracking down on family trust distributions but advisers say they’re still effective wealth-building vehicles.
and could dent the popularity of the vehicles, accountants say. However, there are still plenty of reasons why a family trust may be the right wealth vehicle for many.
“We’re noticing with new clients that they’re saying, ‘This is the first I’ve ever heard of this. What do you mean I can’t just send $20,000 to my kid and not actually give them the money?’” says Pilot Partners accountant Josh Meggs. For that reason, people in the medical profession, lawyers, engineers and business owners may consider establishing a family trust, simply as a means of shielding assets in the event they are sued.
“It gives the family the ability to share that [business] profit and develop that person over time, without having to trigger tax consequences and ownership issues in transferring assets between people’s names.” The longevity of family trusts – they can last for up to 80 years – also makes them popular among family businesses.
“What I’ve been saying to clients is, ‘You know you’re going to be paying your kids’ uni fees, you know you will buy them a car, you know that you might pay for a wedding or a house deposit’.
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