120. Investing Through a Trust vs. Personally: Which is Best for You?

Welcome back to another episode of the 360 Money Matters Podcast! Today, we’re diving into a critical investment decision: should you invest through a trust or in your own name?

This choice can significantly impact wealth creation, asset protection, tax minimization, and investment flexibility.

Understanding Different Types of Trusts

Investing through a trust can be done in several ways, but two common types are unit trusts and discretionary or family trusts:

Unit Trusts: These trusts distribute income based on the ownership of units, similar to shares in a company.
Discretionary/Family Trusts: These allow for the flexible distribution of profits among family members, which can be tailored to minimize taxes and maximize asset protection.

Advantages of Using a Trust

There are several benefits to using a trust structure for your investments:

Asset Protection: Trusts can offer a shield for your assets against legal disputes and creditors.
Tax Minimization: By strategically distributing income among family members, trusts can reduce the overall tax burden.
Flexibility: Discretionary trusts, in particular, provide flexibility in how income is distributed each year.

Challenges of Trust Investments

However, there are also downsides to consider:

Complexity and Costs: Setting up and managing a trust can be complex and costly.
Impact on Borrowing: Trusts may also affect your ability to borrow, as lenders often view trust-held assets differently.

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This podcast contains information that is general in nature. It does not take into account the objectives, financial situation, or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This information is provided by Billy Amiridis & Andrew Nicolaou of 360 Financial Strategists Pty Ltd, authorized representatives and credit representatives of AMP Financial Planning – AFSL 232706

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