A Discretionary Trust is the most used form of trust for operating a business. The trust will have a trustee, this can be an individual, two individuals or a company. Unlike a company, the trust entity is not taxed on the profit of the business. The profit is distributed to beneficiaries at the end of the year. The deed of the trust will list the beneficiaries who are able to receive distribution, but, it is the trustee who has the decision each year of who to distribute to within the boundaries of the deed.
Trusts can be set up for investment purposes as well as business – as can a Company. A Trust can also be set up by a Will to hold assets on behalf of beneficiaries. This can be rather complex when it comes what is taxable and what is distributive, but, if set up correctly it can be a favorable tool.
A Self Managed Super Fund is also a form of Trust and requires a great deal of compliance. Correct advice should be sought prior to establishing a Self Managed Super Fund.