Hi all,
I have been through Steve’s Wealth Guardian (and Trust Magic is next on my buying list).
These structures are ideal with a number of beneficiaries given you can choose how (or if) to income split.
However, if you are single are there any advantages beyond the obvious asset protection in having one? and is the tax department going to take a dim view of one person being sole company director, trustee and sole benificiary??
Hi Ian,
that’s what I have set up at the moment. Family trust with me as trustee and beneficiary. My accountant told me that as long as I treat the trust like a separate entity – eg it pays interest to me for the money I loan it and it recompenses me for my time/expenses spent pursuing the trust goals, then thats fine, and I will be able to decide later who to dispurse the income of the trust to – nyself or another family memberThis bit added in: Saskatoon, I think you are right on your post further down – I am not the sole beneficiary, unnamed family and unborn kids are there with me as well – so that would make it legal, but to all intents and purposes, I will be the only person trust disperses to. Thanks for pointing that out.
CastleDreamer
CastleDreamer,
It can be even more effective with a corporate Trustee. I suggest you investigate this – you might find it works for you better.
Cheers.
Aceyducey
Discretionary trusts are a great tool for asset protection. But it only works in one direction – if you go under financially, your creditors can’t touch the trust assets. However, if the trust itself is in financial strife, it’s not so easy to cut it loose and wash your hands.
If you’re using a corporate trustee, the directors of the trustee are exposed personally if they let the trust sink with debts. There’s been a recent court judgment which held that the directors of a corporate trustee were personally liable for the trust’s debts, where the trust was not able to pay those debts.
Cheers
EDIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…
Hi CastleDreamer.
It’s my understanding that you cannot be the sole trustee and the sole beneficiary of a trust – the trust would be invalid. I think the laws relating to trusts say that you you can’t hold something in trust for yourself.
TerryTerence McMahon
HomeWin
FinanceHi Ian
It is still worthwhile considering using a trust. You never know when your situation will change. eg you could get married tomorrow, then your new spouse and her relatives would automatically become beneficiaries.
You also have the option of forming a company later on and having that as beneificary too (or even another trust).
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry,
Great information from you as usual.
I noted you mentioned the subsequent setting up of a Coy or another trust to distribute to.
The Coy is no problem. However I may be wrong or misunderstood but awhile back I thought I read somewhere that problems can arise if you try to distribute to another trust with a creation date later than the original one. In other words you may be able to distribute from the new trust to the old but not the other way round.
Again I may be wrong so anyone else here please correct me if this is not the case.
Cheers – Gordon
Terry,
Point taken, thanks. I already have a company which was used when I was doing some consulting work. It is essentially mothballed at the moment (still have to do those pesky BAS forms though!).
I’ve thought about using this as the corporate trustee, but I believe that you should separate a trading business from the property side.
This would save 2K in having to wind up the current one and start a new one.
Need to trot off to the solicitor/accountant to find out whether I can leave the money currently in the company in there for investing or whether I need to dividend it out and start from zero.
Stupid question time, can beneficiaries only be family members?
eg if I want to start investing with a friend of mine (and I keep hearing partnerships are not the way to go) could we setup a trust together as joint appointers. He adds his family as beneficiaries and I add him as a director to my company?
Or is this just to messy and we setup a partnership between trusts. [wacko]
…(Exits stage left, on his way to see solicitor)…
Hi Gordon
I think you can distribute to a newly formed trust. eg. in one of my deeds it states that a general benficary can be the trustee of any eligible trust. An eligible trust means any trust under which a beneficariary has any interest.
But I do not know all the tax rules regarding this issue – but would be interested to find out.Ian, beneificaries can be anyone your want.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry,
I think it was some stupid recent legislation that I stumbled upon. I may be totally wrong on this but when I get the chance I will see if I can locate the article and reread it.
Cheers – Gordon
Hi everyone,
I am still trying to understand all this stuff about structures and what is the best way to do it. I am single, still at uni and not overly concerned with capital gains issues as I am planning to generally hold all my future properties indefinitely. I am concerned with legal issues though. Would I be correct in thinking that the best structure for me would be a trust allowing me to distribute income to myself or a company of mine, once I have enough income for this to make sense taxwise? I read earlier that you cannot be a beneficiary and a trustee? To get around this I would appoint my father as trustee. Does this also mean that a beneficiary cannot reinvest funds into a trust of which they are a beneficiary? Basically I am looking to try and set up the best structure that I can to minimise tax on profits that I want to reinvest whilst still being reasonably legally secure. Any advice would be greatly appreciated.[confused2]
P.S. What is the advantage to having a corporate trustee?
Zimonya
Zimonya
Yes the trustee can be a beneficiary. If you use your father as trustee, he will have to guarrantee all loans, but you could still access teh income via the distributions.
Corporate trustee makes it more secure. There may be times when the trustee can be sued, so having a company with no assets as trustee is safer in this regard.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Zimonya,
my earlier post said you can’t be the sole trustee and sole beneficiary; you can be the sole trustee but there must be another beneficiary besides yourself – essentially like a will (a trust has been descrived as a ‘living will’).
As a single person your will has beneficiaries (e,g, your parents) – you do have a will, of course!Terence McMahon
HomeWin
FinanceI think I get this now. You set the trust up and all family and relations get picked up under the general beneficiaries. As trustee though you may choose who if any to distrubute to. In practice, this could just be yourself.
Ian
Yep, despite my confused post earlier, that’s exactly what I do Ian, although I have to go out and check out this corporate trustee business now.
Cheers
CDCastleDreamer
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