Are Trust Necessary?

How are you incurring bank charges and accounting fees if you are not using it?
Do you have properties purchased by the trust?

I personally wouldn't have it any other way and see the costs as small relative to the benefits!

Hello dwong8

There is more to a trust then just asset protection. For example flexibility of income distribution which you may not use today, but will give you options in the future.

There is a lot of information on this forum over trusts. Why don't you do a search ( top right of screen) for this subject and have a read.

Cheers
Elka 

I have read a lot of property books and you will find the experts can't even agree among themselves if a trust is worthwhile or not ! For example, Margaret Lomas finds it unnecessary while Steve McKnight encourages it.

So do your own research and make up your own mind as everyone's situation is different. You may very well find a trust a luxury you don't really need.

I have been tossing up whether to setup a trust or just buy my first IP in my name.

I was interested in a trust soley for the asset protection.

However the problem arises where the IP is slightly negatively geared. To make +ve cash flow I would need to claim depreciation. This works fine if I own the IP in my name as the depreciation comes off my personal tax. The problem arises, from my understanding when losses (depreciation) can't flow out of the trust to offset my personal income tax.

I believe buying IP's in trusts may have worked for others in the past as the IP wass making money off the bat, hence the trust payed tax and then depreciation could be claimed against this within the trust.

The question is, how do I buy IP's in a trust that and make use of the depreciation?

Guy

Hi Guy

You could set up a HDT, but to be able to safely claim the interest it has to have many restrictions, so it may not be worth doing now. It may be better to take small losses in the early years with the DT and just keep rolling these over until a profit is made.

You may be able to divert some other money into your tax someone to help offset this loss. eg. if youhave existing property, your trust could take a long term lease, with a discount, and then sublease the property at a higher rent. This will divert income into the trust which will then help offset the loss while giving you a bigger tax deduction against your personal income.

I have a hybrid family trust ( hybrid discretionary trust) and an ABN connected to the trust 
GST account in the trust/company name   $6 monthly fee same as my St George freedom Account.
Interest off set account in the name of trust/Company  no ongoing fee's  $150 one time set up fee,  same cost for an individual to set up.
Extra loan fee's on IO loan in my name and trust  name  … last loan cost was   $125 for guarantor fee of the trust/company  and $125 for my self as guarantor  2 x 205  morgage fee 2 properties and $100 Loan  set up fee  TOTAL $760
 . New  investment loan  with in last month..Cost for  trust /company to take out IO loan.  Cost  $300 , no other fees  Saved  $460 …
My wife is designated tax payer as she has the lowest marginal rate. tax benefits of the trust can be offset against her taxable income.
Tax/accounting…
Accountant put  MOAB on my P.C for me and showed me how to use it ..Now I just enter the info… as long as I keep very exact records of all income and expenses incurred for or  by the trust.
At tax time I down load it on to  Disk and send them a copy its easy for my accountant to put the tax return together.  Accountant fees  $200 last year.
I'm still learning how the trust works and also tax regs change constantly but I like having a trust  
I can't work because I'm disabled but I can be involved in  the trust  and trust investing/investments ..so its good for me…an my wife can run a business under the trust as well so its flexible.