Family trust?

[Loula]

If a bisnuess has been set up as a family trust would you need to ask parental permision to add a niece of nephew to the trust?

Thanks

[Amy_jellybean]

I would say yes. My great uncle set up his business with a family trust and added my sister, brother and I onto it and didnt say anything to my mum and dad. A few years later, they received a massive tax bill relating to it. My great uncle took care of it but its not the point, I think if you are adding anyone then you should mention it to their parents.

[Now we're 3]

If the niece or nephew are under age then yes I think it would be best to ask / tell the parents that this is something that you are looking to do so to make sure they are okay with it. However in saying that most trust deeds that I've looked at already have multiple extended family members mentioned as beneficaries - aunts, uncles, sons, daughters, nieces, nephews so don't think it is anything unusual. if its a discretionary or family trust the trustee of the trust determines who any trust profits/income gets distributed to. I can't see how a tax situation would arise unless they receive a distribution from the trust at which stage the parents would be aware that income had been earned and that there might be tax implications.

[Loula]

I have just found out that DS is named on one but have been told that he will not recieve anything as it is only for a paper trail, I am not happy this was all done without previous consultation, I want to know if their will be any problems for his or our tax or benefits for the future?

[Frantelle]

Family trust are complicated. You should speak to your solicitor and accountant.

[black_rose]

If he is in the trust they are probably allocating money 'on paper' to him to reduce the tax debt. That is the only reason he would be named in the trust, unless he is a beneficiary. They should be telling you if that is the case jic you are doing the same which is why there would be a tax debt. The laws have changed this financial year just can't remember exactly what it is but don't think you can allocate to minors anymore.

I know we disbursed income to nieces and nephews but we asked permission first and explained that it was on paper only, there is nothing to claim as theirs.

[EsJay]

definately speak to your accountant about what it means for you and your son, as frantelle said, they can be complicated.

[Loula]

Thanks BR, I think I would have been toatlly fine with it if they had mentioned it to us first. But to be told that future payments are insignificant made me feel like my son was not worth anything to them anymore IYKWIM, but from it all is the lack of respect of not asking or mentioning

[black_rose]

I would be mad too! And they don't know what your plans are for the future are.

I would be asking him to be removed they shouldn't be allocating him profits without telling you.

[Loula]

So do anyone know of anything that could be effected in the future? I guess in the very very small chance he gets a scholoship or something? Or our tax or his future? would thay have lodged a tax claim for him? so the ATO believe he has earned money? would this effect pensions? or anything?

[black_rose]

He may have had profits allocated to him in the last financial year, it's normally under the tax free threshold so no tax return is needed but the family trust reports who it has disbursed to so its on record with the ato. It could effect you if your dh was to run his own business and needed to do a similar thing, you need to know how much he has been allocated. If your ds has a bank account in his name any interest her earns needs to be considered too as that is considered to be income too and could change the amount that can be allocated to stay under the tax free threshold.

There should be any long term issues as long as you know what is happening and if you were ever to have a family trust they would have to stop disbursing profits to him.

We would have had a similar issue with our trust and my mil's if she hadn't passed away.