Discretionary family trust Essay

In the general life, wealth management is necessary on attaining a sustainable and a sought after level of living standard over some unrivaleds lifetime. Following this desire, individual psyches take various steps that ar aimed at ensuring the future prey of income on the effective utilization of the current levels of income and in making the necessary investments that will ensure the future flow of income. This can take an individual person perspective or as a family. This results into the formation trust funds. The trustee is the owner of the trust however there are other participants depending on the temper of the trust.The paper is meant to compare and contrast the role, obligation and duties of a trustee of a self managed superannuation fund and a arbitrary family trust. It takes an approach of describing the discretionary Family authority and the role of the trustee, and the from the identified roles, responsibilities and duties of a trustee, they are confronted with the roles, responsibilities and the duties of a trustee under the role, responsibility and duties of a trustee of a self managed superannuation fund on coming up with the possible similarities and differences.Discretionary family trust Discretionary family trust forms one of the common business body complex body parts that are adapted in Australia . The business structure is adapted with an aim of benefiting the family members. The benefits that accumulate in the family arise from the reason that, it enables the family members to share a assess burden. It also used as a step towards protect the family assets. It becomes significant in situations when a family holds assets that realize capital growth and the assets that generate income overtime.The discretionary family trust is comprised of the trustee, appointer, trust fund, and the beneficiaries. The trustee is the legal owner of the trust, the appointer it the person who is responsibility of hiring and firing the trustee, trust fund implies the assets, and the beneficiaries imply the persons who are likely to benefit from the trust. The appointer can be the trustee at the same time.The main objectives for taking the discretionary Family Trust as a business structure follows from its features the enable it to perform its expected tasks. Some of the features that are attributed to discretionary Family Trust include the following Discretionary family trust enables the family to avoid the family business from going bankruptcy and insolvency. Discretionary family trust is also attributed as being the most cost effective business structure to adapt following its low cost of maintaining and simplicity in operation.As a strategy, the business structure enables the transfer of income to the family members with a low tax place according to the Australian tax rates, which imply that the family is likely to reduce its tax burden following the reduced tax revenue that is paid by the family as a whole. This business st ructure is also used as a means of streaming income to the family members, that is , a given type of income can be streamed to one member of the family whereas the other types of will also be streamlined to the other members of the family.The Discretionary family Trust is estimated to be lasting for a time of up to lxxx years . Following the features of the discretionary Family Trust provided above, it can be perceived that a trustee has a responsibility of ensuring an improved welfare for all the family members that are included in the trust fund scheme. Therefore, he or she can be perceived as a custodian for the family property on ensuring rough-cut benefit to the family members. He or she is the custodian of the family business, which is certain to benefit the family in the long-run.There were amendments in all the family trust in Australia in 2002. The amendment introduced the Capital befool Tax Small Business Role over relief that was meant to reduce the Capital gain Tax wh ich the discretionary family Trust was expected to pay at the selling of the assets or business. The main reason for introducing this relief was to provide the discretionary family trust to plan for longer time in consultation with tax attorney and adviser over the tax tariff to take. Therefore, the trustee can be perceived to had taken an initiative planning for the family business in the long run.On undertaking a discretionary family trust, different business vehicles can be taken that involve operating the business as a sole trader, a partnership or a company but in this case through a Discretionary Family Trust . One is expected to make a rational decision on choosing a business vehicle. The changing of a business vehicle is perceived as change of self-control and for that reason tax is imposed on every change. Therefore, its advisable to choose a business vehicle rationally on avoiding the tax impositions. This means that a pliant business vehicle should be chosen.The truste e has a responsibility of choosing the best vehicle that will enable an efficient and cost effective transfer of ownership of the family business. The beneficiaries of the trust are determined by the trustee, that is, it not all the family members that should benefit from the trust. The decision on who should benefit from the trust is done by the trustee, but should let advice on who should benefit from the appointer. When a trustee fails to define who gets the income from the income, the default beneficiaries are given the annual income flows from the trust .The other beneficiaries, that is, the ones who are not default beneficiaries perk income from the trust only on the acknowledgement of the trustee. The settler, that is, the financial advisor, lawyer or accountant is not a beneficiary of the trust. The role of the settler is only to mark the trust. Therefore, a trustee can be perceived to having a duty of determining on who should benefit from the trust, that is, he or she e nsures that rightful beneficiaries get their dues.