trapeeze

 

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.

Implementation process:

  1. Establish discretionary trusts with corporate trustees.
  2. Prepare a written partnership agreement (drafted by a solicitor or online legal provider). As a minimum, partnership agreements should include the following details:
    1. Percentage of ownership.
    2. Division of profit and loss.
    3. Length of the partnership.
    4. Decision making process and method for resolving disputes.
    5. Partner authority.
    6. What happens when the partnership dissolves or on the death of a partner.
    7. Business objectives