Page 29 - Waterfall City Issue 11 November 2023

trustee passes away, the assets in protected against the creditors of the respective beneficiaries via what is
the trust are not frozen while the founder, trustees and beneficiaries known as the “conduit principle”, it will
deceased trustee’s estate is being (who are separate legal entities to be taxed at the beneficiaries’ marginal
wound up (as would be the case the trust). Keeping assets in a trust tax rates, which is a benefit if the
with assets in their personal estate). on behalf of a minor beneficiary or recipients of the income are taxed at
Beneficiaries of the trust who are a family member with special needs lower marginal rates.
dependent on the trust for income is another form of protection –
payments would therefore continue to particularly if the family is concerned Different families have
receive these payments to cover their about a minor’s legal guardian or differing financial planning
living expenses without interruption are worried that a dependent family needs
or delay. member with special needs will be Family financial plans are dependent
taken advantage of should the trust on the needs of the family, so it is
Unlike family assets in the name of founder pass away. important to seek advice that is
an individual, family assets in the relevant to your specific situation.
name of a trust don’t change hands Tax efficiency For example, a young family is less
intergenerationally from one personal Income accruing to a trust is currently likely to have accumulated assets
estate to the other, so no estate or taxed at a rate of 45%, and capital substantial enough to consider a
transfer fees and taxes are payable in gains accruing to the trust are trust, and their family’s priorities may
respect of these assets. currently taxed at an effective rate be better addressed with long-term
of 36%, which are both higher than insurance solutions or retirement
Protection of assets the respective rates applicable to savings. Speak to your financial
Since the assets of a trust are held individuals. However, by allocating adviser about what is suitable for your
in the name of the trustees, they are the income or capital gains to the family’s needs.

“Family financial plans are
dependent on the needs of

the family, so it is important
to seek advice that is relevant
to your specific situation.”

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