Many people have heard of the term “trust” but don’t really understand what they do. A trust is an entity created (normally by a deed) to hold assets on behalf of beneficiaries (persons). The trustee is the person who controls the trust and elects how businesses are conducted, or purchases investments etc. The beneficiaries are the receivers of all the profits of the trust but they have no control over how the trust is managed.
The most common form of a trust is a “Family Trust” which usually have one or both parents as trustees and then the parents and all current and possible future children included as the beneficiaries.
Family Trusts are normally set up to spread the taxation liabilities across more than one person, and are also set up to allow for family businesses to be handed down to the next generation.
Other forms of trusts are Bare Unit Trusts, Discretionary Trusts or Custody Trusts. Each of these trust have very specific traits but are still structured in the same way with a trustee controlling the trust and the benefits of the trust being received by the beneficiary.