Unit Trust Set up Steps:
- Ensure you have consent and all the personal details for the Trustee/s and Unit holders,
- Decide on the type of trustee/s (company or individual),
- Decide on the class and value of the units for each Unit holders,
- Once you have all of the above requirements in order, you are ready to apply!
Setting up a Unit Trust
A Unit Trust is similar to a Family Trust but is generally used for entering into business with people other than your family.
Profits are split based on your percentage of the units and not at the discretion of the trustee. Therefore, if you hold 50% of the units, you would be entitled to 50% of the profits.
With a Unit Trust, at the end of each year, income is distributed to the unit holders in proportion to the units that the beneficiary holds. The Trustee has no discretion. Units may be held by family trusts, companies or by individuals.
The trustee is given the power to distribute trust income and capital to beneficiaries (unit holders) as a proportional amount that is relative to the number of units held by each beneficiary.
A Unit Trust has:
- Negotiability (you can buy and sell units)
- Fixed annual entitlements to income and capital
Unit Trusts are sometimes compared to Companies. Owning units in a Unit Trust is similar to owning shares in a company. However, a unit in a Unit Trust is fundamentally different to a share in a company. A shareholder has no interest in the assets of the company whereas a unit holder has a proprietary interest in all the trust property. Therefore, unit holders can lodge a caveat over land held in the Unit Trust where a shareholder in a company has no such right to do so.