Company & Trust Structures
Why should you consider Company & Trust Structures?
It is not uncommon for SME companies to be trustees of trading trusts. It is a common asset protection device. ... The trading company will act as a trustee of a trust, with beneficiaries entitled to the income and net assets of the trustee company.
If you (and your partner) make the decision to change your business structure, your business will change from unlimited personal liability to limited. Expect to file more paperwork, including your articles of incorporation and bylaws
A trust is a structure where a trustee carries out the business on behalf of the trust's members (or beneficiaries). A trust is not a separate legal entity. A trustee may be an individual or a company. The trustee is legally liable for the debts of the trust and may use its assets to meet those debts
A corporate trustee is essentially a company. Its employees can help you build, manage and protect your wealth when you put your assets in a trust. When you set up a trust, you need to name someone (a trustee) to manage the assets your trust controls.
It is a common practice to have corporate trustees for family trusts for tax benefits. This ensures the limitation of the trustees' liability to the corporate asset. Generally, corporate trustees are shell corporations with no, or minimal, assets. The trustee is personally liable for the trust's liabilities.