Trust Structures: Protect Assets and Build Generational Wealth

Smart Asset Protection Through Tailored Trust Structures

Choosing how to structure your business or investments is one of the most critical decisions you will make. It dictates your tax liabilities, your personal vulnerability to lawsuits, and how easily you can pass assets to the next generation.

While many business owners default to operating as a sole trader or a standard company, utilising a Trust structure can unlock powerful advantages. At Roger Boghani tax & business services, we know that structural planning can feel overwhelming. We treat your goals like our own, breaking down complex tax laws into practical, clear blueprints so you can focus on building your legacy.

How a Trust Structure Works

Unlike a company, which is a completely separate legal entity that owns assets outright, a trust is a legal relationship. Think of it as a protective vault managed by a custodian for the benefit of others.

Here is the flow of how wealth, management, and protection interact within a standard trust framework:

1

The Settlor Establishes the Trust

The Foundation
An independent person (the Settlor) officially creates the trust by signing a trust deed and providing a small nominal sum (the settled sum) to kickstart the structure.
2

The Trustee Appoints and Manages Assets

The Governance
The Trustee is appointed to legally hold and manage the assets inside the vault. The Trustee can be an individual or a company (a Corporate Trustee). For maximum asset protection, a Corporate Trustee is highly recommended.
3

Wealth Accumulation & Investing

The Operations
The trust buys property, operates a business, or invests in shares. All assets are held in the name of the Trustee on behalf of the trust, meaning the assets do not belong to the Trustee personally.
4

Income Distribution to Beneficiaries

Annual Requirement
Before June 30th each year, the Trustee decides how to distribute the trust’s profits among the beneficiaries (family members or entities). The beneficiaries then pay tax on their share at their individual marginal tax rates.

Choosing the Right Trust for Your Goals

Compare the two primary types of trusts used for Australian business and investment growth.

Trust Type Primary Purpose How Profits Are Handled Best For
Discretionary (Family) Trust Asset protection & flexible family tax planning The Trustee has full discretion over who gets what percentage of the income each year. Multi-generational families, high earners, and family businesses.
Unit Trust Joint investments or multi-owner businesses Income is divided strictly based on "units" owned, much like shares in a company. Unrelated business partners or joint property syndicates.

Core Benefits of Utilising a Trust

  • Robust Asset Protection: Because the trust owns the assets—not you personally—those assets are generally shielded from personal creditors, bankruptcy, or professional lawsuits.

  • Flexible Tax Optimisation: A discretionary trust allows you to direct income to family members in lower tax brackets. This process, known as income splitting, legally minimises the overall family tax bill.

  • Streamlined Wealth Transfer: Trusts do not die. When a family member passes away, the assets remain safely inside the trust structure, avoiding complex probate issues and costly stamp duty or capital gains tax triggers.

Roger’s Asset Advice: Trusts are incredibly powerful, but they are not “set-and-forget” systems. The ATO closely scrutinises trust distributions. Failing to complete your distribution resolutions correctly before June 30th can result in the trust income being taxed at the highest marginal rate of 45%.

Build a Structure That Lasts

Setting up a trust requires careful drafting of a trust deed tailored to your specific situation. Let us help you review your current financial footprint, evaluate if a trust is the right vehicle for you, and implement a secure, legally sound structure.