HLB Mann Judd head of wealth management Michael Hutton said family trusts are being ignored as a wealth management tool because it is believed that they are “overly complex and expensive” when in fact they are cheaper to operate than SMSFs, which he says are often seen as preferable.
“There is a tendency for family trusts to be overlooked in favour of SMSFs as a way of managing wealth,” Mr Hutton said.
“Yet family trusts have a number of advantages over SMSFs that shouldn't be ignored.
“In fact, family trusts have far fewer restrictions and rules than SMSFs and are therefore simpler to operate,” Mr Hutton said.
Mr Hutton said the big “attraction” of SMSFs is in the tax benefits that superannuation offers as well as the flexibility they give, but argued the benefits of family trusts are also significant.
“Through a family trust, ownership of assets such as a share portfolio or holiday house can continue on uninterrupted even if a family member dies,” Mr Hutton said.
“Basically this makes family trusts an ideal tool for multi-generational wealth transfer while SMSFs, on the other hand, must be wound up on the death of the last member, which can also raise tax issues,” he said.
“It also means assets held by an SMSF must be sold, and if the family wishes to keep an asset, such as property, they will be liable for stamp duty and conveyancing costs,” Mr Hutton added.