Money
Issue No. 2 - September/October 2001
wealth management for executives
by Darryl Gobbett
Building a successful career and business takes planning, hard work and a measure of luck. While the focus in an increasingly competitive and rapidly changing business environment has to be on today’s performance, protecting your growing wealth for the future is also important. And there can still be a role for discretionary, or family trusts.
Getting an Executive’s financial plan right, now and for the future, is as important as creating and implementing an appropriate business plan. A major part in getting the financial plan right is establishing the correct structures to maximise tax efficiency, protect assets and promote effective estate planning.
How assets are owned or controlled – by you personally, within superannuation, by a company or within a trust - can make a considerable difference to the final strategic outcome. Putting it more bluntly, getting the answer right now could heavily determine the future standard of living of you and your family.
A discretionary trust is simply one of the structures which may be used. But a trust is not a panacea for every financial problem and is not suitable for everyone.
There are several different kinds of trusts. A discretionary trust, which includes what are often called Family Trusts, offers the most flexibility and has wide application in financial planning.
In understanding how a discretionary trust could be of use in an executive’s financial planning, it is helpful to understand how they work.
Importantly, a trust is not a distinct legal entity. It embodies a relationship between a trustee (or trustees) and a number of beneficiaries.
The trust owns the assets and the trustee must, by law, administer those assets in the best interests of the beneficiaries. The trustee can be a person or a company and may also be a beneficiary of the trust. The income generated by the trust is not taxed, but any income which is not distributed is taxed at the top mar...
