Yes. they can't demand payment.

yes, a beneficiary cannot influence or control a discretionary trust (unless they are also the trustee).

Setting up a trust won't prevent conflict because there will still be decisions to be made by the trustee. So C could not like these decisions and complain to A – but be not able to do anything legally because a beneficiary of a discretionary trust has no right to income just the right to be considered.

Steven,

Unless person C is disabled he or she cannot be a beneficiary of a SDT. B can if B is disabled – under the definition in the act.

Setting up trusts costs money. You need advice as well. It may be expensive but the tax savings and Centrelink benefits will make it worthwhile – plus other benefits such as estate planning, asset protection and the fact knowing that the disable relative will be looked after if the trustee or parents etc die first.

Whether you have other trust for non disabled persons to benefit is a different matter to consider.

Trustees cannot be beneficiaries of an SDT for a few reasons:
– An SDT is a special trust that is defined in legislation
– An SDT is set up for the disabled person to benefit and must have only one beneficiary (i think)
– A trustee cannot hold something on trust for himself – there would be no trust as the defintion of a trust is A holding property for B.

Generally a trustee can be a beneficiary of a discretionary trust or a unit trust – but not the only beneficiary.

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.

I think you have mixed up a few things:

There may be a CGT exemption for assets gifted to a SDT.
A pensioner could gift up to $500,000 to a SDT for a family member and not have their pension affected.

Assets of the trust up to $578,000 are not counted towards reducing the centrelink payments of the beneficiary. The main residence can be held in the trust and this doesn't count either. CGT can apply too for the main residence.

But income from the trust is taxed in the hands of the beneficiary. Retained income is too – ie income that isn't distributed.

The beneficiary would have the same tax rates as every other residents I believe.

Not so!

In NSW it is more like $396,000 – the main residence is usually exempt and doesn't count to the threshold.

Transferring extra money into a loan will result in the repayment of principle.

You have to change your loan to a 1 year fixed and pay the interest up front. Probably too late for this year if you haven't begun the process yet.

Keep in mind if you sell a property with an existing mortgage you will probably be breaching the standard loan agreement you have with the lender.

No, it was supposed to drop to 29% next financial year, but this was scrapped in the recent budget so I don't see them going to 25% anytime soon