Forum Replies Created
Make a minute entry in the company that states what the loan is for.
CATA
Asset Protection Specialist
[email protected]Originally posted by carlin:CATA – you asked what our strategy is. Here’s the situation:
We’re a couple of DINKS – 40 and 44. Work full-time in fields unlikely to attract litigation (yes, I know all the “but what if†arguments – but I’m just saying we’re not obvious targets.)
Both now in the second to top income bracket following tonight’s budget, both in the same public service super fund (not many $$ in mine!).GREAT START.
Hubby wants to work until retirement about 13 years away, but would like to go part-time in 8-10 years.
GREAT PLAN.
I want to go part-time within 2 years and completely give up the day job within 5 years, with the goal of managing a property portfolio and also doing some residential developments down the track. (have renovated three houses so far, including contracting work on a major reno)
LOTS OF WORK IN THE NEAR FUTURE, GOOD TO SEE.
I currently manage our two investment properties – both negatively geared, but one is almost positive (in my name) and the other should be positive within 5-6 years (in hubby’s name). Both with interest-only loans. May sell the property that’s in my name once I go part-time, to free up some cash.
HAVE YOU CONSIDERED USING THE EQUITY AND KEEPING THE IP AS IT IS ALMOST POSITIVE?
PPOR with about $300,000 equity in it – is currently security for both investment properties. Additional income from studio rented periodically at back of PPOR.
All properties are with the one lender.
Primary goal with structuring is flexibility with income distribution so that we’re not handicapped when negative properties turn positive. Also perhaps the ability to transfer funds into our super funds?
DO SOME RESEARCH ON DISCRETIONARTY, HYBRID AND UNIT TRUSTS AND POSSIBLE COMBINATIONS OF THEM (JUST A TIP). TAHT LAST ONE IS THE KICKER (SUPERFUNDS) CAN BE DONE BUT CAN GET COMPLEX.
Do I want to be rich? Well, rich enough to finish renovating our PPOR, rich enough to indulge my love of overseas travel again, rich enough to buy a place by the sea, rich enough to have time to spend how I want to, rich enough not to be on the treadmill I feel like I’m on now, and eventually rich enough to put more into the causes and people I believe in.
SOUNDS LIKE A GOALTO BE PROUD OFF.
There is some structures that would suit you well. Some more complex than others. I would look at starting with a not so complex struture so you get the hang of it.
If structures are used incorrectly they are worthless.
CATA
Asset Protection Specialist
[email protected]I would be more concerned with the Super fund side of things. Yes, they are a version of a trust deed, but you need a seperate lisence for these.
Happy Hunting Robbo26. Let us all know what you find.
CATA
Asset Protection Specialist
[email protected]I am not liscenced for superfunds, but some people that I deal with reguarlly are and they have advised me personally not to do this as they feel it is a very grey area.
I would talk to a SMSF specialist and get the facts for yourself.
Sorry I can’t help you further except to do youe due dilligence throughly, remembering that the laws for SMSF have been changing alot lately. So much so that I know of superfund specialists that have stoped setting up funds untill it settles down again.CATA
Asset Protection Specialist
[email protected]Be careful with this type of partnership with your superfund. Learn the rules and follow them, IMOP don’t even try to bend them (which is what you may be doing)
CATA
Asset Protection Specialist
[email protected]Coastymike and Redwing have hit the nail on the head.
There is nothing saying that you must use a trust or a company.
My personal opinion is that if you decide to purchase in your own name, then you are leaving your self exposed to a range of possible problems eg. lawsuits, tax ect.But do your own due dilligence and make an informed decision for yourself. Whether is proves to be the correct decision only time will tell, but at least you would have made a decision.
CATA
Asset Protection Specialist
[email protected]It really depends on what you are trying to achieve. If it is Asset Protection then there is some other options rather than selling your IP’s to the trust.
Is the structure a Hybrid or Unit trust?
Is there a corporate trustee?CATA
Asset Protection Specialist
[email protected]Your banker is incorrect.
You will be selling the properties to the trust, it will not matter if it is your trust or not you will need to pay CGT, stamp duty as well as set up costs for the structuring.
What state are you in?
Why do you want to sell IP’s to the trust?
There could be a cheaper option for you.CATA
Asset Protection Specialist
[email protected]What is your investment stratagy Carlin?
You should get some better answers if you share this info. Your investments will determin your structure to some extent.CATA
Asset Protection Specialist
[email protected]I would also look into changing the apointer. Get the couple to speak to the accountant and find out the facts.
The only stumbling block would be if they do not want to give up there position in the structure, but it may be the case that 14 years ago it was the norm. As Terry said 14 years is a long time.
CATA
Asset Protection Specialist
[email protected]What is the local demographic?
Maybe a wine celler if the local area is of that demographic.
A large pantry, Storage ect. Could you split it for a multi purpose room?CATA
Asset Protection Specialist
[email protected]To take it a step further, borrow in your name through LOC, gift money to trust which then lends the money back to you to put back on the loan. The affect is a negative equity on paper but in reality your position has not changed.
Through some creative loan agrements with your trust it can be arranged that there is intrest accrued but no repayments untill the trust calls for them. This will allow for capital gain in your Asset without having to refinance in the future.
If someone attacks you the trust calls for the intrest to be paid, and as it is a registered loan it will be paid before any litigant. But where is the money really going, into a trust that you control.
CATA
Asset Protection Specialist
[email protected]It goes to show that you must understand the structure. This is of the utmost importance.
I can’t imaging how I would feel in that situation. The couple could sue but would be up for legal costs (if they could afford it). I would ask the accountant to “PLEASE EXPLAIN”.
If there was not a good eplaination I would (I will edit this myself).
CATA
Asset Protection Specialist
[email protected]I like the way you think Dr X. If more people were like you this world would be great.The win/win you created I think is ideal.
Kudos to you.
Maybe you could take something from this for your new business name.CATA
Asset Protection Specialist
[email protected]There is no one size fits all for trusts, so it will depend on what investment stratagie you are using as to which trust.
Hybrid trusts are great but only if the people who are advising you are also great. I have seen loans from the trust instead of the person, accounting mistakes are also common for those who think they can do it. If using a Hybrid, also get a good team arround you who know (possibly use) hybrid trusts themselves.
You can control as many trusts as you want, and as many different types as you want. I would probably suggest another trust after the developments as the equity in that trust will be increasing.
Just a side note, if you set up another trust and it is positive, one trust can be a beneficiary of another trust (if the deed allows this) and the +ve trust could distribute some profits to a -ve trust, reducing taxable income.
Hope this helps Anita
CATA
Asset Protection Specialist
[email protected]Anita,
What extent are the developments?
Reno, split block, extensoins ect.Resettling for changes like the ones you want is something that I would be reluctant to do. It is more than likely to be more expensive to resettle than restructure. If the amendments are not correct the structure may be worthless.
But all is not lost, you have 2 other options that I can think off.
1-Can you afford the loss? If you can, why restructure? You will get the deductions when you make a profit.
2-Can you make the trust positive or netural? e.g rent rise, reduce costs, new IP that is CF+ inside the same trust.
You mention that you are intending to sell one IP, if you do will you make money on that IP and could you use the profit to pay down some debt inside the trust and reduce your expenses?The structure may not be the right one for you now, but sometimes you need to think outside the square to make it work. How can you reduce debt or increase cashflow?
I hope this has helped
CATA
Asset Protection Specialist
[email protected]I agree with Terry
Don’t worry to much. You will get tax credits for the losses and when the trust makes a profit you can use the credits.
CATA
Asset Protection Specialist
[email protected]Coastymike
Your dig at my post is justified. Having re-read my post I know what you are saying ang you are correct. I understand that a trusts assets can be clawed back through various proceedures.
It can also be the case where the trustee company is sued and the director is held personally liable. The last one I heard of was claiming that the Director and the Trust are one and the same (split personality).
Rewding
A registered loan will be paid before any litigant, so you you are correct. This would be a seperate loan document from the trust.
Once again, thank you Coasty for picking up the incorrect wording in my last post.
CATA
Asset Protection Specialist
[email protected]Residex is a great resourse for suburb searching. Can’t remember the phone number off hand. Web address is http://www.residex.com.au
CATA
Asset Protection Specialist
[email protected]Insurance on the property, not the contents as they are not yours (unless you are renting it furnished).
CATA
Asset Protection Specialist
[email protected]
