Hybrid trusts for capital growth and income assets
A hybrid trust is a particular type of trust that combines the best elements of a discretionary trust and a unit trust in the one entity. This structure is useful for holding capital growth and income-producing assets such as rental properties.
The advantages of a hybrid trust are:
- Can save tax by streaming different types of income between the various beneficiaries.
- Unitholders can claim a tax deduction for interest incurred to purchase their units.
- Asset protection – helps protect from bankruptcy and insolvency.
- Easy for new owners to join and old owners to leave.
- Beneficiaries can access the 50% capital gains tax discount.
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2