WA Residential builder - setting up the company structure (family trust?)

Discussion in 'Commercial Law Forum' started by NicNic, 14 June 2019.

  1. NicNic

    NicNic Member

    14 June 2019
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    I'm looking to set up a Pty Ltd company for a friend to operate a residential building business. He will be the sole director.

    I intended to set up a family trust and have the trustee as the sole shareholder of the Pty Ltd. My friend, who is to be the director of the company, would also be the trustee and appointor of the family trust.

    I have received mixed advice regarding the use of a family trust for a business of this nature, namely, whether it is appropriate or not.

    Can anyone kindly offer some input as to whether or not the structure I am proposing is appropriate for this business type, or if there is a better way of structuring it?

    Also, would the trust need to be set up prior to the Pty Ltd company being set up or can it be done afterwards?

    Many thanks
  2. Rob Legat - SBPL

    LawTap Verified

    16 February 2017
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    So you’re setting up a company and trust structure on behalf of someone else, and you’re not sure of what you’re doing (to the point where you’re asking ‘chicken and egg’ type questions)? That sounds dangerous. Corporate structuring is not something that is DIY, and nor is constituting a trust. Getting it wrong is disastrous for a number of fronts, not least of which are taxation liability and legal liability - especially in building. While it might look ‘the same’ doing it yourself the devil is in the detail and the problems may not become apparent until it is well and truly too late.

    I strongly suggest your friend pay a professional to do it properly. Yes, it can be expensive. No, this is not something you want to skimp on. Realise that the cost of getting it wrong, and then fixing it later (if possible), it going to be a good deal more.
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