Trust Seminar Summary

Hi All,
Apologies for the long post, but read on if you are interested in an overview of Trusts according to Perpetual Trustees. It all would have been gobbledigook [?] (never seen that word written before!!) if I had not read Wealthmagic beforehand by the way!!!
I attended a free Seminar Held by Perpetual Trustees…(flagged by Terryw… thanks Terry). Here is a summary (from notes that I took).Remember, these seminars are held to promote the services of the organisation, however,there was little pressure to “sign up”, so that was good.
How trusts work

They are a place to hold assets
Income is distributed from them
Investments stay in the trust until they are gifted or trust is closed

Typical Structure

Appointer and Trustee (individual or corporate) {Limited liability benefit mentioned}
Mum, dad and child 1 and child 2

They draw a definite line between personal assets and business assets
Protects you and your business from things like

Bankruptcy
Legal Action
Ex spouse of a child

Caution – protection is not “grandfathered” (have no idea what that means, even after asking for clarification – so if anyone wants to help out on this, that would be good)
Other Wealth protection vehicles

Superannuation
Place in spouse’s name
Testimentary Trust (only comes into being after death…for the control freaks amongst us[:0)])

Tax Advantages

Income splitting amongst beneficiaries
Maximising concessionally taxed income (streaming)
o Franked dividends
o Depreciation
(If someone could explain how this one is different to income splitting, I’d appreciate it)
Minimising CGT
o Distribute capital gain to low income earners
Changing circumstances

o Allocation of income not fixed
o Maximise tax efficiencies
(This advantage of changing circumstances I take to mean the benefit of easily being able to change the way beneficiaries are gifted based on changing tax positions…or just if you don’t like them anymore!!!)
Cautions

Transferring own home to trust – stamp duty, land tax, crystallising CGT on transfer
Distributing to Minors amounts above allowable gift amount (approx $600) attracts tax of something like 66cents in the dollar up to $14K and then it drops to 47c (called punitive tax)

Testimentary Trust

Incorporated in will
Spreads assets amongst beneficiaries
At Trustees discretion
Children not subject to punitive tax

Example: a very wealthy couple have a child with a drug problem and if they bequeathed a percentage of their estate equally to their children, the drug addicted child would more than likely squander all of their portion…at once. This way they are able to manage distribution of income to that child in a steady way.
Financial Planning

Diversify across all asset classes (property, shares, what are the other 2, I did not right them down!!) This will give you a more consistently reliable return

Shares were also discussed briefly and I won’t include unless asked, although I can’t resist the following stat. Optimum number of shares to own is between 11-15.
Family Trust User Criteria

Need for asset protection
Family members with little or no other income
High level of non-super investment income
Little or no CGT on entry (not sure I understand this one)
Immediate and future estate planning considerations

That’s all. Hope its of interest/assistance to others.
Ish