Meet James and Sarah, a financially-savvy couple based in Sydney. Over the past decade, they’ve diligently invested in S&P 500 index funds, gradually building a share portfolio now valued at $500,000. With dividends yielding approximately 1.5% annually, their investments are now providing a modest passive income stream—and growing.

But as their wealth grows, so does the complexity of managing it.

James is a high-income earner, taxed at the top marginal rate. Sarah, a stay-at-home mum, has no personal income. They also have a young son, and one of their long-term goals is to pass on the portfolio to him once he turns 25, without triggering unnecessary taxes or legal complications.

That’s when they turned to Trustify to explore whether a trust structure could help.

🔐 Why a Trust?
A family discretionary trust can offer three key advantages:
✅ Asset protection
✅ Tax-effective income distribution
✅ Flexibility in future control transfer

Let’s break it down.

🛡️ 1. Asset Protection
Holding the S&P 500 portfolio within a trust, rather than in personal names, helps insulate it from personal liabilities. If James were ever sued (as a director or professional, for instance), the trust’s assets are typically protected from creditors—as they are not legally “his”.

This is especially important for high-income earners like James who may have increased exposure to legal or financial risk.

💸 2. Tax-Effective Income Distribution
The annual 1.5% dividend yield (~$7,500) doesn’t seem like much now—but as the portfolio grows, so will the income. By holding the shares in a discretionary trust, the family can distribute income to lower-income beneficiaries, like Sarah or even their son (once he turns 18).

This can significantly reduce the overall family tax bill.

Had James held the shares personally, the dividends would be taxed at his marginal rate—potentially 47%. By distributing to Sarah, who has no income, the family can pay much less or even no tax on this income in the right years.

🔄 3. Flexibility to Transfer Control (Without Triggering Capital Gains Tax or Stamp Duty)
One of James and Sarah’s long-term goals is to give their son control of the portfolio once he’s mature and financially responsible (ideally at age 25+). If the shares were held in their own names, transferring them would likely trigger:

Capital Gains Tax (CGT) on the unrealised gains

Stamp Duty (if relevant)

However, by using a trust, they can gradually hand over control of the trust (via appointor and trustee roles) without needing to change the ownership of the actual assets. This means no CGT event is triggered, and no stamp duty is payable.

It’s a seamless and tax-efficient generational wealth transfer.

🧠 Smart, Simple Wealth Structuring
James and Sarah’s case is just one example of how a well-set-up family trust can simplify complex financial goals. By using a trust, they:

Protect their growing investment portfolio

Reduce overall tax exposure

Future-proof their estate and succession planning

📞 Want to Set Up a Trust or Learn More?
Whether you’re a high-income earner, business owner, or just thinking ahead for your family’s future—a trust could be a smart strategy.

👉 Contact Trustify today to speak with a trust specialist and find out how we can help structure your investments for security, tax savings, and long-term flexibility.