'Keeping it in the family': family trusts, family relationships and tax minimisation

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Title: 'Keeping it in the family': family trusts, family relationships and tax minimisation
Author(s): Gilding, Michael
Abstract: A trust is a relationship, based in confidence, whereby property is held by one party, known as thetrustee, on behalf of other parties, known as the beneficiaries. A practitioner literature celebrates thetrust’s ‘versatility’, facilitating ‘a whole range of “tricks” with particular aspects of property ownership:nominal title, benefit and control’ (Moffatt et al. 2005: 4). It is a distinctively English institution, originating in twelfth-century English law (Marcus 1992: 26) and found across British settler societies,including Australia and the US. Trusts serve two purposes in particular. First, trusts are extensively used for familial purposes. Forexample, a 2004 British government survey found that the ‘main motivation for setting up a trust relatedto having the ability to control assets’, such as ‘passing them on to children or grandchildren; providingfor a beneficiary in a particular way; withholding assets until children reach a certain age; and ensuringmoney stays within the “bloodline”’ (Bard and Brockington 2006: 12). Second, they are used to protectassets from creditors, not least the tax office. A 2003 Australian study of ‘red flags of risk’ in relation totax evasion among the very wealthy, for example, found that ‘trust distributions’ were the best ‘red flag’of all – followed by ‘capital loss creation’, and ‘use of an offshore entity in a country that may be a taxhaven’ (Braithwaite et al. 2003: 225). A growing body of research directs attention to ways in which social and economic processes are mixedtogether (Smelser and Swedberg 2005). Family trusts exemplify this point. This paper explores thesocio-economic dynamics of family trusts, in particular the articulation between familial and tax-related purposes.
Publication type: Conference paper
Research centre: Swinburne University of Technology. Faculty of Life and Social Sciences. Institute for Social Research
Source: Proceedings of 'Re-imagining sociology', the Annual Conference of the Australian Sociological Association (TASA 2008), Melbourne, Victoria, Australia, 02-05 December 2008
Publication year: 2008
Keyword(s): Accountancy; Bequests; Entrepreneurship; Family relationships; Family trusts; Intergenerational transfer; Money management; Motivations; Taxation; Wealth
Publisher: The Australian Sociological Association
Publisher URL: http://www.tasa.org.au/conferencepapers08/main.html
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