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Family Trust Play Important Role

The current popularity of SMSF superannuation funds has family trusts being ignored as vehicles for holding family assets.

However there are fewer restrictions on family trusts so they are easier to set up and maintain.

In fact there are many times when a trust can be an advantage, especially if there is a family business, or assets such as a holiday home where there are opportunities for sharing the ownership of the assets and sharing the distribution of the income.

Through a family trust ownership of assets like a share portfolio or holiday house can continue uninterrupted even if a family member dies. This is because the family member does not own the asset, the trust does. Consequently, the assets do not form part of the individual’s estate.

Basically this makes family trusts an ideal tool for multi-generational wealth transfer while SMSF must be wound up on the death of the last member. This means that assets held by a SMSF must be sold, and if a family member wishes to keep an asset, like a property, they will be liable for stamp duty and transfer costs to transfer the asset to their name.

Anyone wishing to invest larger amounts, say over $500,000, may not be able to do so through a SMSF. However there is no limit on the amounts that can be invested through a family trust. The income from the investments can be split between family members to achieve significant tax advantages if there are low income earners in the family.

Monies invested through family trusts can be accessed at any time, as there are no age or working related conditions for access to monies in family trusts.

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