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A business can be owned by one or more trusts. A discretionary trust is common. A discretionary trust holds the business assets on behalf of the people named in the trust deed, the beneficiaries. The beneficiaries are usually members of the same family.

The trustee, which is often a company, makes the decisions for the discretionary trust. It determines which beneficiaries receive the business profits and assets, how much they receive, and when they receive them.

A trust can protect assets from creditors or family law claims . For instance, you could transfer your family home to your trust with a condition in the trust deed requiring the trustee to allow you to live in it until you die.  Provided that you take the necessary steps, including giving up control over what the trustee does with the house (other than allowing you to live in it), you will cease to be the legal owner of the house. Generally speaking, a claimant can only claim assets you own.

A discretionary trust also potentially offers tax benefits. It can distribute more profit to beneficiaries in lower income tax brackets and less to beneficiaries in higher tax brackets, reducing the total tax payable on the business profits.

Other benefits of a discretionary trust include easy estate planning and effective retirement planning.