What You Need To Consider When Setting Up A Family Trust

Number one is you. Our magic number is about $90,000 in how much we want to cap out at giving you. The reason is because the tax rate goes from 34.5% to 39%. We’re better off sending money to a bucket company after the $90,000 mark. However, we don’t want to rush straight to a bucket company because they cost money to set up and run from an accounting perspective. We’ve got to make sure it actually is saving you tax before we consider something like that.

The second one is your spouse. Some things to consider is other income that they might earn, HECS debt, working for someone else or have an investment income.

Number three is retired parents. For this to really work they need to be self-funded. What this means is that they’re not receiving a Centrelink old age pension, because if we distribute trust income to them, they’re going to lose or reduce the amount that they’re receiving. And usually, the costs in a lost pension, does not outweigh the benefits that you’ll get from a tax benefit.

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