“Outside of super, the family trust is a popular vehicle. It's still flexible. Again, we're talking about the law today. Hopefully an unrealised gains tax doesn't come in for a family trust, but it has been on the cards earlier.”

Butler continued that under a family trust structure, distributions could be made to “mum, dad, to the kids” when they turn 18, but these then have to be managed under section 100A of the Income Tax Assessment Act 1997.

“If we distribute to a company, we've capped our tax rate at 30 per cent. If the company has too much money, we could do a Div 7A loan to mum or dad. We've got to make the minimum yearly repayments. But this is what's going to happen with the $3 million cap,” he said.

“As advisers, you might be thinking there is a lot more work coming your way, a lot more complexity, and you can be a lot more sophisticated in front of our clients. They can't just go to the average tax return preparer.”

However, he said that it also requires a lot more assistance in managing all the other problems in the family trust, such as reimbursement agreements, UPEs, and dividends.

“[You will need to ask] have we made our dividend resolutions? Have we made our trust resolutions? Do we need a family trust election? Does the company need an interposed entity election?”

“A family trust is still flexible, however for future reform, your guess is as good as mine. Basically, can we trust the government? We can use a corporate beneficiary. We can income split. You need to make your resolutions before 30 June. We can get the 50 per cent discount through a family trust if we stream the capital gain.

“However, be very careful about family trust elections. The ATO is really cracking down on them and interposed entity elections, so be very careful you're managing those.”