Trust is a legal arrangement that allows for the separation of legal ownership from the beneficial ownership of an asset.
An example of a common trust structure in Australia is a Superannuation Fund where the member is the beneficial owner however the legal ownership ie. the control, is held by the trustee of the super fund.
The trust structure includes the trustee who becomes the legal owner of the trust. Whereby they control the trust assets.
The trust structure also includes the beneficiary. The beneficiary is the beneficial owner of the trust assets. In general, trusts can have multiple beneficiaries and a beneficiary can be an entity, ie a company. However when it comes to SDT there can only be on beneficiary and they have to qualify.
The trust deed is a document that outlines the rules and guidelines of what the trustee can do with the assets for the benefit of the beneficiary. When it comes to SDT that trust deeds has to have certain rules to qualify.
At the establishment of the trust a Settler has to donate an amount into the trust. The settler cannot be the beneficiary or the trustee. The amount can be as nominal as $10.00. Usually the professional that helped to establish the trust i.e., accountant or lawyer will be the settler.
Appointer
The trust deed can nominate an appointer. The appointer has the power to replace the trustee and ultimately it is the most powerful position of the trust.
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.