COMPANY – TRUST STRUCTURE

When you add the combination of a company and trust together, you have a very flexible tool to control and distribute wealth from your income earning assets.

From an asset protection point of view, a company may manage your operations.  This gives you the protection of limited liability from creditors.  If the trust owns the assets, then they are better protected from potential claims of creditors against you personally.

From a tax point of view, the company has the ability to both pay a salary to you up to your maximum marginal tax rates (this will depend on IRD rules of salaried shareholders), and pay the balance as a dividend through to the trust.  The trustees can then decide whether to pass on the dividend to the beneficiaries or retain it in the trust.  In this situation the trustees can pass on the company dividend imputation credits to the beneficiaries or the trust may pay tax at the same marginal rate as the company.