It is a bit of a trend lately for property owners to set up hybrid trusts in which to manage their properties. The question remains: What are the benefits in doing so? Michael Quinn explains.
- asset protection – it helps protect from bankruptcy and insolvency
- it allows you to distribute income to family members who are on low tax rates
- there are no formal audit requirements
- there is an absence of any formal legislative framework, such as the Corporations Law, to control the activities of the trustee
- it allows you to ‘stream’ income: you can distribute one type of income to one person and another type of income to another person
- unit holders can claim a deduction for the interest incurred on the cost of their units
- it is comparatively easy for new owners to join and for old owners to leave the structure.