Join our investing community

Trust setup advice.

Discussion in 'Accounting, Tax & Legal' started by gergnz, 23rd Aug, 2009.

  1. gergnz

    gergnz New Member

    Joined:
    23rd Aug, 2009
    Posts:
    2
    Location:
    Sydney, NSW
    HI everyone,

    I am looking for some advice please.

    I own a 25% share in a company, which looks like it is going to take off over the next couple of years. We are looking at restructuring and our accountant has come up with this structure:

    Current Company
    ||
    Unit Trust
    / | | | \
    (branch to shareholders)
    ||
    Family Name - Discretionary Trust
    ||
    Company
    ||
    Hybrid Trust

    To me this seems very complicated and quite expensive. (the cost of my components from the branch down is $5.5K) I am currently taking in about $20K PA before Tax. We have expectations the company could grow 5~10 times over the next 2 years all going well. (Though based on the last 2 years, we only grew about 2 times)

    I would really like to know if there is a cheaper way to set this up and/or if people think this is a reasonable setup.

    What else can I do with these trusts?

    What are the ongoing costs likely to be?

    Would like to hear any and all, thoughts and opinions.

    Thanks.
     
  2. Scott K

    Scott K New Member

    Joined:
    24th Aug, 2009
    Posts:
    3
    Location:
    Geelong
    I practice in this area. You need to elaborate re; litigation chances (what industry), what gross income to business and what borrowings tied up in the business? i am happy to help. Initial thoughts are there is a layer in this structure that may not be essential. this is a prelim comment until more info provided. happy to discuss further. Scott
     
  3. gergnz

    gergnz New Member

    Joined:
    23rd Aug, 2009
    Posts:
    2
    Location:
    Sydney, NSW
    Scott,

    thanks for the reply. The industry is Information Technology. There are no borrowings in the business. Currently the gross income is somewhere in the order of 150K~200K, but as stated could be 1/2M ~ 1M if things in the pipeline all go well over the next 2~3 years.

    gergnz.
     
  4. tax guy

    tax guy Member

    Joined:
    9th Dec, 2010
    Posts:
    14
    Location:
    Sydnye, NSW
    wow what a complex strucure. More entities = more accounting fees. The hybrid trust and unit trust are not required.

    I would have a company with the shares owned by family trusts. Not sure if you have IP involved but if there is any potential value hold this in another entity to separate this from the business risk.

    In summary I think a company and family trust is sufficient, and another entity if you want to separate the IP