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I have quite a few posts in my history about trusts. Also TerryW.
They are quite complex but as your learning think of it as a big story with heaps of differing lines and you will understand after a while.
Trustee, beneficiaries, appointers, executors, ect have different roles, powers and responsibilities.
Or buy yourself a book on trusts or read online, they can save you thousands if you are serious about using them.
No right to income? I don’t understand how a beneficiary of a discretentary trust can have no right to income.
Beneficiaries receive income from the trusts. Do you mean they CAN receive income at the discretion of the trustee but do not have a RIGHT to it?
The beneficiaries have no influence or control over these decisions in a discredentary trust. ??
Ok I understand we would need to pay to set up both a standard trust and SDT. This is worthwhile due to the savings.
I just want to make sure we don’t spend money on things which are not nessasary.
Considering the fact person C has an spouse relationship with person A it is nessasary to consider C as a standard trust beneficiary
to prevent C conflicting with B.I imagine all people who have trusts run into the same dilemmas. Consequently as we all generally belong to family groups
we need to consider each other in light of one another for things to work.Terry,
Back to my previous question.
According to this division the SDT can only have a single beneficiary. So in this instance I need to explain to person A to create a standard trust for person C to become beneficiary. Also to create a SDT for myself (person
.Is this not expensive?
Every trust costs money to create and Im wondering if there is some other option for this.
Could you send me a link of that social security act? I myself am going to consider applying to be in a SDT after I convince person A to do it.
Centrelink gave me three criteria which I know I can pass two but the third may be a little grey. It’s about being severly disabled and not independent and needing a personal carer 24/7 which may be a stretch.
Setting up these sorts of structures is often difficult due to social conflict.
In this case person C is jelous of person B so person A needs to understand how to consider both beneficiaries to keep the peace.
Sorry, child not a spouse. Person A sets up a SDT for it’s child. person C is spouse and married to person A.
From memory trustees can also be also be beneficiaries.
Terryw wrote:Istvan051 wrote:What if you have an investment house worth 700,000 then how do I insert 578,500 only into this?Possibly you could transfer a % to the trustee of the SDT and yourself as tenants in common. But then you have to watch out for capital growth down the track.
Yes, this is why this disability trust stuff is a little difficult.
If it grows larger than the disability amount of 578K then excess amounts would reduce your centrelink payments. So let it grow or monitor it?
Next question- Person A owns assets and sets up a SDT for spouse person B. Person C is married to person A.
Should person A integrate person C into the disability trust or a separate trust altogether in order to keep the peace between these two?
What if you have an investment house worth 700,000 then how do I insert 578,500 only into this?
I also understand retained income. If the trust earns 20,000 and I receive 15,000 then I and the trust will both pay tax on this 20,000.
Yes, the beneficiaries would have the same tax rate, true.
BUT, all DSP pensions are tax exempt. This means if I have a $20,000 pension and no other income my taxable income is 0.
If I then become a beneficiary of a trust and get paid 6000 in the first year I pay no tax still. Once I earn over 6000 from this I start paying tax.
http://www.fahcsia.gov.au/sa/carers/progserv/pages/specialdisabilitytrusts.aspx
This explains what I was trying to explain under means test exemptions heading.
So if DSP is 700 per fortnight then you will get 18,200 per annum. This amount is tax exempt and does not form part of your taxable income.
If you are involved with a trust and receive income and DSP then you will pay tax on your trust income only. But this will reduce your DSP payments on a sliding scale.
If you are involved as primary beneficiary on a special disability trust you will pay tax in the same way but your DSP payments will not be affected up to an amount worth $578,500 for asset value being inside the trust.
Capitalism is about competition and greed. I see it is true capitalist countries progress faster than all others. In my opinion why is this?
Greed is the desire for more than what you need but is also a powerful emocion which can push the human brain to it’s limits of creativity and innovation. This means capitalism is responsible for driving down the cost of food and the cost of all sorts of things as capitalism allows businesses to work more efficiently. As business owners get greedy they push their minds hard in order to figure out how to pay their staff easier, make product cheaper and make more money for themselves.
Make no mistake I think capitalism is the way of the future but I also believe strongly capitalism can exist without exploitatiion of others for profit (the socialist economy). So I believe a capitalist society can exist inside a socialist economy.
The entire western society has significant wealth compared to less developed parts of the world. Why? Capitalism, not exploitation!
For your definition I studied this stuff at uni and a socialist economy is one which no exploitation of others occurs and nobody personally owns the means of production. This was the way Karl Marks described it.
In the states exploitation is worse to the point were you will earn about $5US per hour to work at macdonalds and here at least you will earn about $15-23 depending on your age to do the same thing. This is because we have unions and laws on minimum wage.
I think greed is a great insentive to go to work, a great insentive to do great or poor things and a great insentive to act responsonability or irresponsibly.
The bottom line is that greed gets things done!
I also believe this is the insentive you speak of but you think it is only present in a traditional capitalist setting in which people are allowed to own the means of production. I do not understand this as according to the above guidelines greed can become prominent even in a socialist society in which all are allowed to potentially be greedy.
As a side note, Aristotle says greed is good only in moderation in which it manfests as ambition. A total lack of greed is sloth which means to be lazy.
In true socialism nobody has to take risk as nobody personally owns the means of production. This is owned by government.
Everybody would be given a job based on the requirement for jobs but would be paid an equal share of profit by government.
Every person should be allowed to potentially have wealth and stop working whenever they are able by means of selling time to government.
Everybody is actually employed by government as everything is owned by it.
What it also means is that the only thing that takes risk is the government.
Yes, the model also includes private living quarters adjacent to the child’s living quarters. So imagine the building where the children live then ontop of the business next to this is myself and my wife’s private quarters.
Interdependence basically means we acknowledge that we are both very independent people keen on building an interdependent relationship. The model is a framework for the relationship which allows it to actually happen.
I want to improve my model a little further by including a guest section nearby the private quarters.
In this, the child/ren may perhaps pay rent to the trust from money they get from being a beneficiary or being employed. This would be rent to help fund their own accommodation inside the business.
This is because the family trust owns the property and the trust is a financial entity in itself which can come up with loses or gains.
If I own a business jointly with my wife then we may employ our child/ren in order to pay adult tax rates but who’s to say they are to be treated any differently as if they were just beneficiaries anyhow?
Beneficiaries in this situation are still going to interact with mum and dad and be asked to do things perhaps to help with homelife or even things related to the business.
They can be employed casual, part time or full-time on books but who really regulates all of this. I mean I could pay them more as adults rather than distributing income to myself or the wife and ask them to pay the rent instead of me or my wife.
Yes, well I’m sure many in this situation would consider making sure they happen to be one or the other to reduce tax.
Yes, well we can work in the same company which is owned by a family trust but the company would have two departments in which each of us work.
According to you beneficiaries do not “work” for money. Employment of children by the company is different from being a beneficiary I get it. I wonder if tax implications are different for beneficiaries then for being employed.
So the trust would own property which I called the “business” in which myself and my wife call “work” and the children live full-time.
I would be able to have my own house and my wife is also able to have her own house but only one of us is able to get CGT exemptions as the main residence as the second house would be seen as investment.I may pay my chIldren a salary by including them as beneficiaries of the trust as they help inside the business. But remember as I would be working in a separate department to my wife either I employ our kid to work for me or my wife employs our kid to work for her.
A fundamental rule is husband and wife should never have shared responsibilities inside ANY business or workplace as this is a recipe for failure.
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