Business ownership and trusts

[The_Husband]

From: The Husband


Hello

I would like to ask members the best way to own company shares and a business so that I can get the income into my trust.

I assume the trust can just hold shares in the company. Are there any risks to the trust assets in anyway from doing this?

What about if it is just a business. Can the trust own the business? I assume that if the business gets sued, then the trust assets are at risk. I wonder if there are any ways around this?

Thanks in advance.

TH

 

[DaleGG]

Reply: 1
From: Dale Gatherum-Goss


Hi TH


>I would like to ask members
>the best way to own company
>shares and a business so that
>I can get the income into my
>trust.


The most common way is for the trust to own the shares in the company. This way, the company can pay a dividend to the trust.


>I assume the trust can just
>hold shares in the company.
>Are there any risks to the
>trust assets in anyway from
>doing this?


No, there are no major risks to this strategy.


>What about if it is just a
>business. Can the trust own
>the business? I assume that if
>the business gets sued, then
>the trust assets are at risk.
>I wonder if there are any ways
>around this?


I would never like to see business assets in the same entity as investment assets. This is just too risky.

The most common way around it is to have two separate entities. One to own businesses and one to hold investments.

Have fun

Dale

 

[WebBoard]

Reply: 1.1
From: Chris G


Hi peoples,

Dale wrote:

>The most common way is for the
>trust to own the shares in the
>company. This way, the
>company can pay a dividend to
>the trust.

>The most common way around it
>is to have two separate
>entities. One to own
>businesses and one to hold
>investments.

Just trying to get my head around things. So the income from the business is transferred to the trust by paying a dividend on the shares that the trust owns in the company. I presume this trust is the one that only holds business assets?

That being the case how is the income from the business used to purchase investments? Does it have to be simply paid out as income to one of the members of the business trust and then placed into the investment trust or is there an easier/more tax effective way?

Cheers
Chris

 

[DaleGG]

Reply: 1.1.1
From: Dale Gatherum-Goss


Hi Chris

There are a number of ways that this could be achieved, including . . .

The business can pay an administration fee to the investment trust on a monthly basis.

The business could distribute income every year to the investment trust via dividends.

I'm sure that Rolf or Kellie can confirm or deny this, but, I have also known of banks to grant loans using one trust or company as guarantor of another (along with the usual directors, their mothers, grandmothers, and a few close friends and associates thrown in for good measure!!!)

Have fun

Dale