Finding the right structure - trusts

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Running Time: 8:53

Date: 01/05/2014

Which is the better structure for your business - a discretionary trust or a unit trust?

Discretionary trusts are fast becoming the preferred way for families to hold their investments and carry on business, according to tax expert Michael Jones, of Cummings Flavel McCormack - and government and professional bodies tend to agree.

Despite the higher compliance costs, Michael says the benefits of flexibility in profit distribution, and the break in direct ownership of assets by individuals, can outweigh the negatives if the circumstances are right.

Unit trusts, on the other hand, are more appropriate when multiple families have interests in assets because individuals own units and therefore have a fixed entitlement. Beware of the potential capital gains implications though.