The family business.
Held under a trust.

A trust that holds a family business is one of the more demanding trust structures to design and run. The trust owns the shares. The trustee sits on the board for control. The operating body runs the business. And every design decision at outset shapes how the trust performs over the horizon it is meant to reach.

Two ways the trust holds the business

The trust either owns the trading company directly, or owns a family holding company that owns the trading company and any other assets the family wants gathered under the same roof: real estate, liquid portfolio, minority stakes, passive interests. The direct structure is simpler and cheaper and fits families with one operating business and no other wealth to aggregate. The layered structure is what families reach for once they hold more than one asset, run more than one line of business, or expect reorganisation ahead. The choice is a design choice, not a rule.

The trustee on the board

The trustee sits on the board. Where the trust holds the trading company directly, the trustee sits on the trading company board. Where the trust holds through a family holding company, the trustee sits on the holding company board and often on the trading company board as well. The point of the board seat is not to run the business. It is to hold the control and oversight that the responsibility for the trust assets requires. Non-executive presence, not executive responsibility.

Two elements sit behind this. Responsibility. The trustee is accountable for the trust assets and cannot delegate the accountability away, so the trustee needs the seat that lets it monitor, question, and consent to material decisions. Ability. The trustee does not have the ability to run every asset the trust holds. So the pattern is the same across every domain: outsource the execution to the professional with the ability, retain the oversight because the responsibility does not move.

What the trustee delegates

The trustee is not the operator of the trading business, not the fund manager of the liquid portfolio, not the property manager of the real estate, not the litigator on legal matters, not the tax return preparer. Each of these professionals is engaged, monitored, replaced when performance requires it. The trustee sits on the boards where governance requires the seat, engages the operators and professionals across each domain, and reports to the beneficiaries and the authorities. The role can be as demanding as running a small family office. A further piece in this cluster walks the trustee's remit in full.

The tax question at outset

Where the trust holds the trading company directly, the trust receives the dividends. Where the trust holds through a family holding company, the holding company receives the dividends first, and only what the holding company distributes upward reaches the trust. The distinction has tax consequences.

Dividends received at holding company level are taxed at company rates in the holding company's jurisdiction, commonly with participation exemption or similar reliefs available on inter-company dividends. Dividends received directly by the trust are taxed under the trust's regime, which typically differs from the company regime. Capital gains follow the same logic. A sale at holding company level is a company-level event; a sale at trust level is a trust-level event.

Which regime is more favourable depends on the family's residence, the trust's jurisdiction, the trading company's jurisdiction, and the beneficiaries' residence. The tax analysis is done at outset because it shapes the structure choice and is expensive to reverse mid-life.

Reorganisation and exit

Where the layered structure is in place, the family can reorganise the underlying business without the trust having to change. Bringing in a partner, spinning off a division, consolidating trading companies, taking a new investor, each of these happens at the holding company level, with the trustee involved as a board member and shareholder rather than as an executor of the transaction. The trust deed is not amended and the beneficiary class is not reopened. Where the trust holds the trading company directly, reorganisation reaches the trust more immediately, and the trustee acts as shareholder of the trading company itself for each change.

The eventual sale of the operating business is at the company level in either structure. The proceeds sit in the holding company where one exists, or in the trust where one does not. The trust continues after the sale, holding cash and reinvested assets instead of trading shares. The multi-generational reach the trust is built for is what allows the wealth to be held through the transition. Where a sale is on the horizon, the preparation that makes a business sellable starts well before the transaction is on the table.

The trust is not always the answer

The structure works when the family wants the wealth held across a longer horizon than the operating business, or when the trust serves a purpose the operating structure alone cannot: multi-generational holding, vulnerable beneficiary, delayed distribution, separation of ownership from control across the family. Where none of these is the case, the trust is not needed and direct family ownership of the business or the holding company is the simpler and cheaper answer.

The design job

Holding a family business under a trust is a design job, not a template. The trust owns the trading company directly, or owns a holding company that owns the trading company alongside the family's other assets. The trustee sits on the board for control and oversight, not to run the business. The tax treatment of dividends, gains and other flows depends on where the receipt sits, at trust level or at company level, and is worked out at outset. The trustee engages the professionals with the ability to run each asset. The operating body runs the business. And the trust continues into and through the eventual exit, doing the job the will alone cannot do.