Maybe take the tenant to the residential tenancy tribunal and get a judgment against him for the repairs and cleaning. You can then chase him for the money -using a debt collector if necessary.

Terryw
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http://www.truststructuresguide.com.au/

is another book – lists 13 different types of trusts.

Terryw
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Bankwest will lend up to 90% on rural land.

Terryw
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My understanding of trusts and asset protection is this (I am not a solicitor or accountant).

Assets owned via a trust are not owned by the trustees or beneficiaries. So if a trustee is sued personally, their assets in the trust are relatively safe. If they get a judgment against them, their personal assets can be seized by creditors, but the assets in a trust cannot – generally.

However, if before going bankrupt they sold their house to someone (including a trust) within a certain time frame, this sale can be reversed. This time frame was 6 months but recently the law changed on this – think now 5 years.

If the trustee has taken a loan out to buy a property, and guarranteed this loan, if the property were to be taken back by the bank (ie foreclosen upon), the trustee’s personal assets will be at risk if there is any short fall. This is because of the personal guarrantee.

Same with a business. If you are using a trust to run your business, and have a 5 year lease with a personal guarrantee, if the business fails, you will still be personally liable.

If you are a trustee and have investment properties with problems, the tenant may be able to sue the owner if injured – the trust, and other assets of the trust may be at risk. (this is why some people set up new trusts after a few properties).

I think the trustee may be personally liable as well in certain circumstances. Hence, some people use a company as trustee, so if that happens, the company can be woundup – it will ahve no assets.

If you are running a pty ltd company, directors are protected to a certain degree as well. eg you rent a place, without a personl guarrantee, the business fails – you can wind up the company without your assets being at risk.

But if the director of the company has done something illegal (such as trading while insolvent) then they can be personally sued with their own assets at risk.

With the family law court, they can look behind the trust to determine the ownership of the assets. So if you control a trust, and get divorced, you spouse may still have a claim on those assets.

Centrelink are onto trusts as well. If you are trustee, director of a trustee company, or appointer, beneficiary etc, then Centrelink will look at the assets and income of the trust as if they are your personal assets.

If you are a drug baron, growing marijuanna in your trust owned farm, the property can still be seized by police. etc etc.

Trusts are certainly not worthless and offer the best form of asset protection.

Terryw
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Many people use trusts. There are plenty of reasons, positive being:
– Asset protection
– Estate Planning
– Tax savings

I cannot think of many disadvantages, but one is property in a trust does not get any land tax threshold (so you may pay a bit more land tax).

Terryw
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Even if you offer to put them up in a the best hotel in town for a few weeks, it may be worth it. Or buy them a car! (wonder if you could claim this)

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A lot of these types of investments go bust with investors losing all of their money. Just have a look at the asic website, http://www.asic.gov.au

Terryw
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Don’t worry Mal. They will fix it up and it will look better than before – so you can put up the rent!

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I suppose it depends on how much and how fast you withdraw the equity. If your portfolio is growing at $100,000 per year, and you only take $80,000 you should be right. But have to plan for years with no growth too.

Do a search on Steve Navra for his ideas on this topic.

One potential problem is if you are withdrawing from an investment to fund lifestyle, then die, your estate may have to pay CGT, but the remaining equity may not be enough to cover the CGT.

Perhaps a good life insurance policy would be a good idea.

Terryw
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