Small Business Tax Blog by Fletcher Tax Accountants

One reader asked if I could step back and explain the basics of some of the lingo within setting up a ‘Trust’.

In any type of trust (discretionary, unit, fixed, hybrid etc) – common elements are present. Hopefully I can explain them in as simple terms as possible. But please make sure you understand these more thoroughly if you’re pursuing a Trust structure. [...]

We’ve all heard of Trusts but what are they in practice? Do we need them? Is there only one type of a so called Trust?

This post will look at Unit Trusts – only one of the variables within the Trusts’ umbrella.

A Unit Trust is a trust in which the trust property is divided into a number of defined shares – units. Beneficiaries subscribe to these units. A beneficiary is then entitled to the income and capital of the trust in proportion to the number of units they hold.

So why a Unit Trust? – Beneficiaries interests are clearly defined, can be easily transferred and can be reacquired by the trustee. Also important to note that trusts by nature, don’t have the highest form of regulations as company structures do. [...]