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Which structure is best? Trust, Co etc.

Discussion in 'Accounting, Tax & Legal' started by Kria, 16th Jun, 2008.

  1. Kria

    Kria New Member

    Joined:
    16th Jun, 2008
    Posts:
    3
    Location:
    Launceston
    I am thinking of starting a financial planning business as an authorised representative for another licensee. I want flexibility and asset protection for my family and have heard different views from many others on what is best. I am thinking that at the start a basic discretionary trust is ok then once business gets going maybe introduce a company into the equation. I will be the only authorised representative initially but others could be introduced down the track?

    Are there issues with simply starting up with a discretionary trust?

    I understand that the trustee of the trust is the one who must become an authorised representative, if so what if there is only one trustee (me) and I wish to add another authorised rep later?

    Rather than a discretionary trust, is a unit trust structure best or is this only necessary when there are multiple partners?

    Is it best to have a unit trust with units owned by a discretionary trust so that if partners are added later it is easier? or is this not necessary?

    Should a company be made trustee of the trust or is this unnecessary when there are no assets in my name but are instead in my wife's name?

    With the ability for courts to look through company structures and lift the corporate veil what is the real advantage of having a company as trustee of trusts. In other words, either I will be trustee or will instead be director of the trustee company, in each instance assets can still be at risk won't they?

    Is it all just simpler to set up a company with a discretionary trust as the only shareholder?

    Is it true that if I operate under a trust then I will need to register a business name (in each state if necessary) which can be usurped by another company if they use that name wheras if I set up a company structure at the start I can use the company name with no future concerns?

    Look forward to responses, thanks

    Kria
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    9th Jun, 2005
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    Location:
    Sydney, Australia
    I'm not sure why you want to operate from a trust?

    Why not just start with a Pty Ltd company? Cheaper and easier.

    As director, you will be liable either way if things go wrong - just so long as your other assets are protected as much as possible.
     
  3. MattR

    MattR Well-Known Member

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    23rd May, 2007
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    Location:
    Sydney
    I'd try and keep the goodwill in a trust. A company does not get the general 50% CGT concession, and even with the small entity CGT concessions it can be a buzzard to get the cash out tax effectiveley from a company. And as FP businesses have important trail income, capital gains is almost a given.

    The downside of a DT is taking on partners, that becomes tricky. So you could consider a Hybrid Trust, or a combo UT with DT unitholder.
     
  4. Kria

    Kria New Member

    Joined:
    16th Jun, 2008
    Posts:
    3
    Location:
    Launceston
    Flowchart of business structure problem

    See attachment. :confused:
    Look forward to input
     

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