hi all ,,,i am wondering if any one could give me an idea on how the trust works in properties ,why would you do it ?
I’m sure one of the accountants (or ex accountants!) on here will be able to give you a much better answer than me, but as I’ve just set up all this trust stuff, I can give you two reasons why I’ve done it:
1. ASSET PROTECTION!! Now if someone sues me, we don’t lose the lot, only anything held in our personal names. Or, alternatively, if someone sues the trust, they only get what’s in there. This way we don’t lose everything in one hit. Unlikely, but never say never.
2. INCOME FLUIDITY!! We can take the trust income and distribute it according to our other incomes, and so split it in the most tax effective way.
Hope that helps. There’s a great book by N.E. Renton about Family Trusts (can’t remember the exact name) – definitely good reading.Keep smiling
Felicity
Hi,
I am just putting the finishing touces on a new product called Wealth Guardian that outlines the different structuring options when it comes to property investing. I expect this will be available by mid-late February.
It is difficult to explain trusts easily, since it is a confusing and complex topic.
Still, I’ll try to give an overview…
There are two main parties to a trust.
Because a trust is not a separate legal entity, a Trustee is the person or entity that is charged with the responsibility of buying and managing the assets of the Trust
The beneficiaries are the people or entities for whose benefit the Trust has been established.
When you buy property in a trust you do so in the name of the Trustee on behalf of the Trust.
The major benefit of a Trust is that it allows for control of an asset without actually owining it.
For example, setting up a Trust where you are the Trustee and beneficiary means you control it (as the Trustee) and also share in the distribution of profits (as a beneficiary).
The disadvantages of a Trust are that it is complex to understand and also expensive to create and administer (in accounting fees!).
If you’d like to know a lot more, then I’d encourage you to think about investing in Wealth Guardian when it is available as it is a 60 page workbook with an audio component too.
Watch this space for more info when it comes to hand.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
and sort of related – what about setting up a company?
My understanding is that if you are negatively gearing (which is not the game here) then you own property under your own name so you can claim back the tax. But if we’re not claiming back tax (because we’re making profits, not losses) then what advantage is there in buying property under your name?
Also, can you be the sole trustee and the sole beneficiary of a trust? That is, I don’t want to share with anyone.
Hi,
There is a golden rul of tax planning which is not to buy appreciating assets like property in a company.
This is because companies cannot claim the 50% discount for CGT.
Re: Trusts
As Trustee you decide who gets money, so it doesn’t matter how many beneficiaries there are… at the end of the day you decide who gets what, and if you only distribute to yourself then so be it.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
A reply to Louise:
A trust cannot exist where the sole trustee is the sole benficiary! The legal point is that one cannot hold something in trust for oneself.
If you don’t wish to leave your wealth to anyone then you don’t probably don’t need a trust!
Who are the beneficiaries in your will? They could be the other beneficiaries in a trust besides yourself (a trust has been described as a living will).
Nigel Renton’s book “Family Trusts” is worth reading even if you don’t need one…yet!
TerryTerry
FinanceThank you for that Terry. I looked into setting up a trust in NZ, but decided against it for various reasons. Looks like the rules are similar here.
I’m looking for a way to protect my assets from (for instance) a greedy ex-defacto boyfriend who decided that half mine is his, that type of thing…
I’ll check out the Nigel Renton book – I’ve seen it in the bookshops.
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