Establishing the right structure from the start can save you time, money and heartache

20 years ago Karaco Wealth were involved with a start-up business who requested our advice when establishing an operating structure for the business. The structure recommended was a Family Trust for flexibility together with a Trustee Company for limited liability. Both also provided some perpetuity for the future.

In order to reduce exposure to liability for the spouse and to retain ultimate control of the operating business by the client, it was agreed that the client be the sole director and shareholder of the trustee company and the sole appointor of the trust. As the business expanded, distributions were shared amongst the family in the most tax effective manner. Unfortunately, the client and the spouse separated and ultimately divorced.

The structure allowed for the client to continue operating the business with limited interference from the spouse during the break-down of the marriage. Although the structure was included in the assets of the family pool, it enabled the spouse to receive a tax effective settlement funded by the business for a period after the divorce. The client was able to retain the business and the structure as part of the settlement which allowed the continued operation of the business with minimal interruption. Throughout this process we were able to assist both parties to reach a mutually acceptable outcome with the assistance of mediation.