Employment Benefits Trust:

In some professions and employment contracts there are significant employee benefits provided. These are referred to as fringe benefits; perquisites or perks and include various types of non-wage compensation provided to employees in addition to their normal wages or salaries. This may be preferred because the benefit may be more valuable to an employee than the actual cash equivalent, such as a company car, housing, health or dental insurance, education allowance or child care. Sometimes an employee would exchange part of their salary for another form of benefit and this is referred to as ‘salary packaging’. These benefits are taxable and may be taxed under a different regime such as fringe benefits tax. If you receive such a benefit in cash or liquid form, you may wish to place such monies into a trust structure. If you do not have liquidity or capital needs at the present time, it is advisable to invest the money or save it for future use.  Establishing a trust from your employment benefits is a strategy which may be greatly advantageous to you. Holistic and thorough advice from a qualified and experienced Asset Protection and Trusts Lawyer may be useful in this regard.

There are many reasons why an employer would offer employment benefits rather than increased salary. It may increase the economic security of staff members, and consequently improve worker retention across the company. It is also a component of reward management which is a set of structures and policies that are geared towards rewarding staff in a manner which is consistent with their value added to the organisation. In this manner it attempts to compensate staff more fairly, equitably and consistently. A reward management aims to devise and efficiently operate a reward structure for an organisation. Reward structure usually consists of pay policy and practices, salary and payroll administration, total reward, minimum wage, executive pay and team reward. Examples of employment benefits or perks are company vehicles, paid hotel and travel costs, food and drink or an equivalent allowance, leisure activities, stationery, priority job assignments and vacation scheduling.

There are a few reasons for rolling any liquid employment benefits into a trust. Firstly, a trust structure provides you with a high level of control to manage capital and income. It also provides the benefit of tax minimisation, flexibility in investment and distribution, and protection against external risks such as bankruptcy and insolvency. If you use a discretionary trust structure then no beneficiary has a fixed entitlement to the trust assets and you have the power to determine the individuals or organisations that are beneficially entitled to income of the trust. Comprehensive and detailed legal advice in trusts law can be of immense utility in deciding and drafting a suitable trust structure.

A trust is a useful device which can facilitate wealth generation, investment, tax minimisation and distribution of income and capital. A qualified Asset Protection and Trusts Lawyer can review your situation and advise of the appropriate trust structure to cater to your goals and needs.

If you need further legal advice on your Employment Benefits Trust matter, you may book an appointment with us by telephone on (02) 9233 4048 or by email to info@navado.com.au.

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