Trust cloning involves setting up a trust (the 'cloned trust') with the same terms and beneficiaries of another trust (the 'original trust'). Assets may then be transferred from the original trust to the cloned trust. The advantages of trust cloning are:
- Asset protection - allows a trust carrying on a business to separate the business assets (premises & equipment) from the business.
- Succession planning - to transfer control of assets to the next generation.
- The small business restructuring roll-over (SBRR) allows the ability to transfer assets to a cloned discretionary trust without any tax consequences (CGT or income tax).