Family Trusts Set to Boom


Financial advisers are now saying that family trusts will become the new way of structuring client finances following the Federal Budget’s watering down of generous tax concessions on superannuation savings.
The Budget places strict limits on the amount of money that can be pumped into super. It also imposes a cap on how much money can be transferred to a tax-free private pension and it also increases the contributions tax for high income earners to 30 per cent.
“I see family trusts having a resurgence because they offer such flexibility. Fewer people will be relying on super as a core strategy,” says Kate McCallum, a director of boutique advisory firm Multiforte, told the Australian Financial Review.
The advantage of family trusts is that they can reduce household tax bills with all family members on their income tax-free thresholds.
And most importantly, there is no limit on how much people can put in or take out.
As a tax management tool, and alternative to super, capital gains and earnings generated by assets inside the trust are streamed to beneficiaries on low marginal tax rates.
McCallum estimates it costs $2000 a year to run a trust, the same amount for running a self-managed super fund.

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