Can a trust own shares in its trustee company

Can a trust own a company share? What is the meaning of trustee of shares? A trust is simply a relationship.

However, this changes when we think about trustees and what they can hold for beneficiaries. Trustees can own many types of property, including liquid cash and property.

Completion of VAT returns. Heres the scenario. Client wants to shift ownership of his own company by using his parents to acquire of the shares , and then settle the shares into trust with the beneficiaries being his children (ie their children). Client will be a trustee and use trust money to pay beneficiaries school fees. By having a discretionary trust own the shares , you have the flexibility of who in your family group pays the tax on any capital gain from the sale of your business.

In the long run, this can potentially save to tens of thousands of dollars in tax. Having a trust allows a degree of separation between assets owned by you personally, and assets owned by your trust. For example, shares owned by your trust may be better protected from creditors’ claims than those owned by you personally.

This is especially the case if your trust has a corporate trustee. Placing shares into a family trust can be one way of achieving this, but it is important that family members and trustees alike understand the complexities than can arise should the trust ever wish to sell those shares. Changing trustee is also a difficult process and it can be very costly and time consuming.

Therefore ideally shares of a trustee company should be owned by the trustee of a separate discretionary trust. Another option is the spouse least at risk. You may want to retain the responsibility at arms length and instea appoint someone you trust such as your spouse, close frien family member, or a professional.

Before you can register a trust as a trustee , you need to. Although trusts often have an individual assigned as the trustee , a trust company can also act in the same capacity. If you own a trading company , you can now sell some, or all, of your shares to an employee ownership trust (EOT) (subject to satisfying certain conditions) for full market value without incurring any capital gains tax liability in a way which also benefits your employees. The point is that the shares aren’t owned by the trust, they’re held (that is owned) on trust by the trustee(s).

A family trust owns all shares of a company , also the company is a beneficiary of the trust As a family trust , you need to distribute all taxable income to beneficiaries otherwise the trust will be taxed on the top tax rate. Since a trust is not a legal entity it cannot directly own shares in a company. Shareholders can decide who the directors are. The trustee company owns the assets of the trust. Depending upon who owns the shares , depends upon who gets the income from the company.

This gives an extra level of asset protection for you with your assets. You can also issue preference shares to improve things even more.

Section 1of the Trustee Ordinance provides that no member of a trust company shall at any time hold shares in the capital of the company to an amount exceeding one-fifth of the issued capital of the company the time for being (except where the trust company is a subsidiary of a bank within the meaning of section of the Banking Ordinance). Where a charitable company acts as a trustee of an unincorporated charity, the ‘general power of investment’ applies. You will still remain a trustee , however, and will be able to direct the assets within the trust.

If your company ownership is held by your living revocable trust , your successor trustee immediately steps in and operates your business when you die. The successor trustee you have picked has full power to sell the stock, vote the shares or do whatever they have to in order to make certain your company continues operating. Can that fund hold shares in its name and not in the name of its trustee ? In case of depository system, Demat account can be opened for a registered trust (need not in name of its trustee ) and deposit e- shares to its account.

In that case, it should be possible even in case of physical shares. Recording shares held in trust It is the names of the trustees that should appear in all statutory records. The fact that they are holding them on trust is strictly a private matter between the trustees and the beneficiary.

While discretionary trust assets are legally owned by the trustee , the trustee does not beneficially own the assets.