A popular structure where there are non-family operators of a business is to create a unit trust. Units are issued to the respective operators personally or to their family trusts. A corporate trustee holds the relevant trust property and usually the operators are represented as directors on the board of the corporate trustee.

Generally the terms of the unit trust provide that the unit holders will be entitled to proportions of the capital and income of the fund. For example,  if there are 100 units issued and a unit holder has 10 units, the unit holder or their family trust will be allocated 10% of the income derived from the business and effectively have a 10% ownership of the capital. More sophisticated unit trusts may provide for various classes of units with different rights attached to them.

It should be remembered that a unit trust is effectively an agreement between the trustee and the unit holders and does not directly create obligations between unit holders. Therefore it is important in non-family operations that a unit holder's agreement be entered into between the respective unit holders to deal with such matters as employment obligations, the ability to buy and sell units and procedures to deal with disputes arising between the respective unit holders.

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Janelle Brown Partner
Trevor Kuhle Accredited Specialist