You may have heard people talking about their family trusts and wondered what they are and why people have them.
A family trust is a non-fixed trust that has made a family trust election. Family trust elections are usually made to access a variety of tax concessions. Some of the benefits they can provide include;
However, the benefits of making a family trust election should be weighed carefully. Once a family trust election is made, it is very difficult to make distributions to beneficiaries that are not in your family group.
A family group consists of a specified individual and the specified individual’s spouse as well as the specified individual and spouse’s parents, grandparents, brothers, sisters, nephews, nieces, children or lineal descendants of the nephews, nieces or children.
Distributions to beneficiaries outside your family group are subject to family trust distributions tax where the trustee will be taxed at the highest individual marginal tax rate of 47% (inclusive of the Medicare levy).
To find out more about family trusts and the potential benefits and implications for you, talk to your adviser or get in touch with the Crowe Tax Advisory team, who can help you determine whether you are eligible to make a family trust election.