Business Structuring – Advanced Structures

Below, you can find the most common terms and definitions in the area of advanced business structures. More information is coming soon. In the meantime, if you would like more information, contact us

Bare Trust

A bare trust is where a trustee owns property for one beneficiary absolutely. Their most common usage is in trusts created in Wills, and also establishing Limited Recourse Borrowing arrangements in Self-Managed Superannuation Funds.

Blood Descendant Trust

A Blood Descendant Trust is a trust where the only beneficiaries of some or all of the trust (typically the capital i.e. assets) are restricted to the bloodline (lineal descendants) of a particular person or couple. They are used for more advanced asset protection.

Discretionary Partnership

A discretionary partnership is a partnership where the partnership has the discretion as to the distribution of income and capital from the partnership. Typically, there will be a mix of companies and trusts in the partnership. The benefit of a discretionary partnership is variable distribution of income between the partners (often appropriate in a partnership of professionals who have differing fee levels), flexibility of adding and removing partners potentially without Capital Gains Tax or Stamp Duty, and the ability to access the corporate rate of tax while retaining the profits in the business structure.

Discretionary Trust (advanced usage)

Typically, a discretionary trust [Link to a Discretionary Trust page] will have a trustee who runs the day-to-day business of the trust and owns the assets for the benefit of the class of beneficiaries. Many consider that the appointor (who has the power to add or remove the trustee) has the power of the trust. There is typically only the ability for one trustee or appointor, and if there are more than one, then they must act jointly.

This view of a discretionary trust causes difficulties in estate planning [Link to Estate Planning page] when one trust is intended to be left among multiple children, or different people wish to control different parts of the discretionary trust. It is possible to have more targeted controls over a discretionary trust, including utilizing guardians (who can veto decisions of the trustee), granting powers over parts only of the trust or over fixed shares of income and capital. It is also possible to split one trust into many.

Hybrid Trust

A hybrid trust is a trust that has a mixture of features of other trusts, typically between a Unit Trust [Link to a Unit Trust page] and a Discretionary Trust [Link to a Discretionary Trust page]. They are used for more advanced tax, asset protection, and structuring scenarios.

Joint Venture

A joint venture is like a partnership, but instead of profits the partners share the thing made. They are more appropriate than partnerships in particular business endeavours.

Secret Trust

Although typically a trust will have listed beneficiaries and controllers, in certain asset protection circumstances it will be appropriate to have the identity of these ultimate controllers concealed.