First Principles of Business Law

4. Trusts

4.1. Case study

In 2002, Edward Delgardo completed his plumbing apprenticeship and became a qualified plumber. He then worked as an employee of a plumbing company for six years before starting his own plumbing business. He is operating the business as a sole trader.

Edward is married with two small children. He and his wife live in a house that Edward inherited from his deceased parents. The house is worth $350,000.

New facts: Edward is worried that, if he is operating his business as a sole trader and he makes big profits, he will end up paying a lot of income tax. This is something he would like to avoid. However, Edward also wants to maintain a maximum of financial flexibility, in case, from time to time, he needs to reinvest any profits that he makes back into the business.

Edward has heard that a 'trust' may be a way of running a business. He wants to know if this is a possibility for his own business, and if so, what the advantages would be.