Are You Sure That Your Family Affairs Are Optimised When It Comes to Taxation and Benefits?

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Are You Sure That Your Family Affairs Are Optimised When It Comes to Taxation and Benefits?

18 October 2018
 Categories: , Blog

If you've been quite successful in life, have a great job, a loving family and a palatial home, you may be quite content. Everything seems to be moving in the right direction and there are no storm clouds on the horizon, but this is not the time to be complacent. You should be thinking carefully about your family's future. You may realise that you need to prepare for a rainy day, and in the worst-case scenario, your passing. Consequently, you should be doing whatever you can to capitalise on your investments to provide for your family in your absence. With this in mind, you may be considering the purchase of an investment property, but you have to do this carefully in order to ensure that you don't run into problems. How should you proceed?

Getting It Right

There is no doubt that an investment property, when carefully managed, can create valuable assets for the family unit. However, it has to be set up properly if everything is to pass to the beneficiaries without question. This will also help you avoid excessive taxation and other issues related to family law.

Individual Approach

You need to look at three different options when it comes to handling this investment opportunity. To begin with, you could set up an individual estate, either by yourself or with your spouse, and in this case, all the benefits of the property will be shared equally, including capital gains. You would need to nominate one of the individuals as the actual owner of the property in order to make the most of tax deduction benefits, although you could apportion ownership in a scenario known as 'tenants in common' to handle matters proportionally.


You could also opt to set up a legal corporation, although you may not be able to apply any capital gains benefits with this approach. Each individual would be a shareholder in the business, but it could prove to be problematic if they were to separate down the road.

Family Trust

Perhaps it would be better to establish a family trust and a separate trustee to handle everything. The trustee would, in turn, distribute any income to the beneficiaries each year and take care of taxes. There are several different types of family trust available, each one of which has a different approach to capital gains and taxation. You could look at discretionary, fixed or testamentary trusts to see which is better for you.

Proceeding Carefully

As you can see, it's quite a complex matter, but putting in the effort to get all of the numbers and things like taxes figured out now will be worth it. Make sure that you talk with a taxation service professional so that you don't make any mistakes.