All Topics / Help Needed! / Unit trusts explained

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  • Profile photo of p_hewsonp_hewson
    Member
    @p_hewson
    Join Date: 2007
    Post Count: 10
    March 16, 2007 - 10:08 am

    Hi everyone,

    Can anyone please explain how a unit trust works? I am thinking about going into partnership with my brother and I am wondering if a unit trust may be the solution to setting it up.

    Questions I have:
    1. Is it expensive to set up?
    2. Do we operate a joint account to pay for all the outgoings etc.?
    3. Is it easily set up?
    4. What happens to the unit trust as we expand our portfolio?

    Thanks

    P_Hewson

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    March 16, 2007 - 2:56 pm

    Unit trusts are similar to companies in that they have units which are like shares. But they do not have the limited liablity benefits of a company.

    Cost to set up is a few hundred dollars. Easy to operate, bank account would be in the trustee’s name. You could each set up a discretionary trust to own the units. As you buy more you can use the same unit trust, depending on the circumstances at the time.

    Terryw
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