A partnership of discretionary trusts is a partnership where each partner is a discretionary trust. This is a good structure for unrelated parties wanting to operate a business or invest together because:
- Provides each partner with a fixed interest in the partnership; say 50% each.
- Allows access to the CGT small business concessions.
- Provides asset protection (when set up with a company as the trustee of each discretionary trust).
- Flexibility in splitting profits amongst family members.
- Simple to establish and relatively easy to dissolve.
- Partners are not employees so superannuation contributions and workers compensation insurance are not payable.
- Shared management, combined skills, experience and knowledge can produce a better product or service.
- Establish discretionary trusts with corporate trustees.
- Prepare a written partnership agreement (drafted by a solicitor or online legal provider). As a minimum, partnership agreements should include the following details:
- Percentage of ownership.
- Division of profit and loss.
- Length of the partnership.
- Decision making process and method for resolving disputes.
- Partner authority.
- What happens when the partnership dissolves or on the death of a partner.
- Business objectives