Hello all
I have seen posts that say that the type of DT that you set up is dependant on your goals.
I have been reading my trust document (30 pages) and happily it caters for everyone and his dog (as long as he is related [smiling]) as beneficiaries, for companies and trusts with connections to beneficiaries and the ability to allocate profits without having to pay out the money at this point (book entries).
Except for hybrid DTs what other type of DTs could you set up. ? I am trying to work out how your goals effect the type of DT you set up and just can’t see it. Any examples would be great.
Also does anyone know what wording I would have to find in the document that would indicate that it could be a hybrid DT?
Thanks in advance
ElkaDiscretionary Trust is kind of class of trust. There can be many different discretionary trusts because each deed can be worded differently.
A hybrid discretionary trust is a mixture of a discretionary trust and a unit trust. It can act as a discretionary trust until you need to issue units, then it can act as a hybrid, so it can be good to set up from the beginning just in case you need one later.
The difference in the deed will be the section dealing with units of the trust. Discretionary trusts won’t have anything on units.
Terryw
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Hello Terry
Thank you for your answer.
I have read my trust deed several times(good bedtime reading [sleepyanim] ) and it seems as if the trustee can do anything anywhere in the world, including going into parnerships, buying/selling shares, lending and borrowing and much more. It is so all encompassing that I still can’t figure out what could be different for different goals. I know it’s asking a lot, but do you have a simple “for instance”? [confused2]
Am I correct in assuming that with a hybrid DT, only the unit holders recieve a share of the profits and then in the proportion that they hold units? i.e the decretionary part is not available until the units are bought back by the trust.
Thanks again [smiling]
ElkaElka
Sorry, cannot think of a for instance off hand. Not all trust deeds are properly drafted, so some may leave out things that you may want to do, like run a business, or may not include a wide enough definition of beneficiaries, eg. step children if you were to remarry etc.
I think with a hyrbid, the trustee still has the option of not distributing to the unit holders at their discretion – however, this may have tax consequences – if the unit holder is not receiving an income then how could they claim the interest. This may be necessary from an asset protection point of view, as if the unit holder went benkrupt, and the units were taken contol by the bankruptcy trustee, you wouldn’t want them getting the income.
Terryw
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Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Good points.
Thanks Terry
ElkaThere is a great book on trusts which I am just reading:
Trust Structure Guide 2005. By Harwood Andrews Lawyers and the Taxation Institute Australia.
Terryw
Discover Home Loans
Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Is it readable for the layman or do you need some accounting / legal background. [grad]
Can I get the ISBN number from you please?
Thanks
ElkaAll great points from you Terry.
You know alot about trusts for a Mortgage Broker.
Why is that?
Have you had a bad expirence at some point?CATA
Asset Protection Specialist
[email protected]Hi Cata
Thanks. No bad experiences yet, but you never know. I am just interested in structuring for some strange reason!
Terryw
Discover Home Loans
Parramatta
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Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Originally posted by elkam:Is it readable for the layman or do you need some accounting / legal background. [grad]
Can I get the ISBN number from you please?
Thanks
ElkaHi Elka
The book is $250!!!!!!. It is fairly easy to read, I think, much easier reading than Chris Batten’s stuff, but a bit more advanced than Dale Gatherum Goss’.
Check out some libraries before purchasing. (They have it at UNE Law library)
http://www.cch.com.au/fe_ps_details.asp?product_id=4697&topic_code=3&top_selling=true&bhcp=1
[blink]Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Wow. That’s pricey.
Thanks for the tip about where to borrow it. I will have to wait till I come for my next visit but I’m a fast reader.
Until then I will continue to consult the forum trust guru (that’s you Terry [grad] )
Don’t worry, I know to seek professional advise too. [wink2]
Cheers
Elka
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