A common alternative and perhaps more flexible than a company is that of a family trust, particularly a discretionary family trust, where the family trust owns the shares. This ensures asset protection.

A trusts does not have a separate legal existence like a company.

In a trust, the legal owner of the business is different from the person(s) for whose benefit the company is held.  In such cases, there will be one or more trustees who legally own the trust and one or more beneficiaries of the trust, being those for whose benefit the trust is held.  In a discretionary family trust, you, your family members and/or any family companies may be trustees and/or beneficiaries of that trust.

All transactions (such as loans) entered into on behalf of the trust are undertaken by the trustee and are personal obligations, which means that the trustee can be personally sued.

The trustee has power to enter into transactions on behalf of the trust pursuant to a Trust Deed or, where no trust deed exists, pursuant to relevant state Trustee Acts.

The trustee holds his/her legal interest in the trust not for his/her benefit, but for the benefit of another, the beneficiary or beneficiaries in whole or part.

A trustee can be a company, which can trade accordingly under its company name or an individual.  Trusts can have multiple trustees.

A beneficiary can be an individual or a company and a trust may have any number of beneficiaries depending on the terms of the trust deed.

There are a number of different trust structures, for example there is a unit trust or a discretionary trust.

The interest of a beneficiary will vary depending on the nature of the trust.

In a unit trust, the trust property is divided into units with each beneficiary of the trust holding one or more units.  In a simple unit trust, each beneficiary has an interest in either the income or the capital (or both) of the trust, which is proportional to how many units he/she or it holds.

The interests of a unit holder can be varied by varying the rights attached to the units, similarly to issuing different class of shares. For example some units may only be entitled to income, or a class of income from the trust and others may be entitled to capital of the trust.

With a discretionary trust, the trustee has the discretion as to how and to whom the income and the capital of the trust is to be applied.

Therefore, under a discretionary trust, the beneficiaries of a trust merely have a right to be considered by the trustee and cannot demand a distribution of the income or capital of the trust.

However in some cases a trustee can be compelled to make some essential payments, particularly in relation to minor(s).

Discretionary family trusts are commonly used for family businesses such as farms because they enable a family to divide the farm's income flexibly from year to year depending on where the income is most needed.

Discretionary Family trusts can also enable income to be distributed in a tax effective manner, although it should be noted that trust income is passive income and the tax legislation limits how much passive income can be taxed at a concessional rate, especially in the hands of children.