One of the key benefits of a family trust is that the trustee can distribute income earned by the trust [from the trust property] in any way they see fit, provided distributions are made to people who qualify as beneficiaries.
Can a trust distribute to anyone?
Can a Trustee Also Be a Beneficiary of a Trust? Yes, a trustee can be one of the beneficiaries of a trust. For example, an individual could set up a trust, appoint themselves as trustee and distribute income to their family. However, a trustee cannot be the sole beneficiary of a trust.
Why have a family trust election?
A family trust election (“FTE”) is a choice by a trustee to specify a particular individual (the test individual) around whom a family group is formed. The choice as to who will be the test individual is crucial, as not all family members will be part of the ‘family group’ for tax purposes.
When do you pay family trust distribution tax?
Family trust distribution tax (FTDT) is payable where: a trustee of a trust has made a FTE a partnership’s partners, a company or the trustee of another trust have made an IEE to be included in the family group of the individual specified in the FTE made by the family trust, and
How are beneficiaries chosen in a family trust?
This family group then sets the maximum range of beneficiaries amongst whom the trustee can distribute to without triggering significant adverse tax outcomes, such as family trust distributions tax. The choice as to who will be the test individual is crucial, as not all family members will be part of the ‘family group’ for tax purposes.
Who is the test individual in a family trust?
The choice as to who will be the test individual is crucial, as not all family members will be part of the ‘family group’ for tax purposes. Broadly, the family group includes: Any parent, grandparent, brother or sister of the test individual (or the test individual’s spouse);
How does a family trust work and how does it work?
How a Family Trust Functions. A family trust is a legally binding document that covers an individual’s assets during one’s lifetime and specifies the terms of dispersing those assets after one’s death or incapacity.
