A hybrid trust takes the best features of a discretionary trust and the best features of a unit trust and puts them into one to create a flexible and powerful tax planning solution. This means that the trustee has the discretion to distribute benefits to the beneficiaries of the trust – to beneficiaries who are on low tax rates, as well as have unit holders who are absolutely entitles to a portion of the benefits.
They allow the respective rights and entitlements of unrelated third parties to be respected, while still allowing flexible income and capital distributions between those parties, and once this is done, between those parties and all related persons (eg spouses, children, related family trusts and so on).
The income tax, capital gains tax and asset protection attached to hybrid trusts means that they are often the preferred method of structuring a business or investment activity. This is particularly where more than one un-related party is involved: for example, two separate family groups who are buying a commercial property together.
Trusts are a fantastic tool to protect your personal and business assets, while offering substantial tax planning opportunities. Contact us for an in-depth discussion to consider if a trust is ideal for your estate plan.