Hi there,
We spoke to our accountant the other day about setting up a trust and company to protect our assets. We haven’t bought any cash flow +ve property yet but want to have everything set up before we buy our first one. At this stage we plan to Buy and hold in NSW, we are not sure about wraps yet but possibly down the track when we have some experience, it might come as natural progression.Her recommendation for our current needs was:
A Family trust with ourselves as beneficiaries and also setting up a company as a corporate beneficiary of the trust. She explained that the corporate beneficiary could be used if either of us are going to be pushed into a higer tax bracket we can distribute income to the corporate beneficiary and pay 30% tax.
This sounds good to me, but it appears that most people in this forum talk about another structure where you have the family trust with yourselves as beneficiaries and set up a company to be a corporate trustee.
My accountant did not mention this structure at all.What are the benefits of having corporate trustee and what situation should it be used for?
Thanks everyone, I’m learning so much everyday it’s hard to take it all in!!!
Hi Gracie,
The “standard” structure seems to be Family Trust with a company as corporate trustee (this is what we have). This offers greater legal protection than having an individual as a trustee. A second company should be able to added later as a corporate beneficiary if needed, you would need to ensure that the trust deed allows this.
Thanks RC, it seems the way everyone is going.
I wonder, if I am both the trustee and a beneficiary of the trust, why couldn’t the company be both the corporate trustee and a corporate beneficiary?
Does anyone know?
From GracieI’ve been meaning to ask my accountant that for a couple of years and never got around to it. Maybe there’s some legal conflict of interest with the company both administering the trust (as trustee) and benefiting from it.
Hey all,
From my simplistic understanding of this stuff, the reason you wouldn’t make it a beneficiary is because you do not want the compnay to hold anything of value. If you distribute funds into the Company then it has something worth being sued for. If you have a $1 or $2 company it is only worth……you got it $1 or $2. It is just another level of insulatin yourself and allowing the sharks to get none of what you worked for.On another note check out discretionary trusts as well as family trusts as they operate virtually identically but have a few quirks.
I will posts that separately.
Enjoy
Enjoy
AD [:0)]“Don’t dwell on reality; it will only keep you from greatness.”
-Rev. Randall R. McBride, Jr.
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