Help! Structure for purchasing & holding prop.

Christian, for the manual Terry suggested (an excellent manual) go to http://www.gatherumgoss.com

Cheers
Mel

Hi all,

Firstly, great forum!! I’ve been sitting on the sidelines for a while, but now I’m ready to take the plunge. I am quite keen to set up my investments through a trust, and to that end I was just about to purchase ‘Trust Magic’ until I read an article in this month’s Personal Investor. It had the following to say :

quote:

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A few years ago, the roundtable discussions looked at family trusts extensively for high-income earners, but these structures have become more complicated to run and have come under increased scrutiny…

Williams says you need to have around $5 million to $ 10 million to make a family trust work.

…”I notice accountants, especially second-tier accountants, advise people to set up family trusts, but at the top end of the market very few sophisticated investors are setting up new family trusts. But those people who have already set them up are continuing to extract the benefits of the distribution from the trust. They are not closing them,” he says.

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All pretty general and all pretty vague. As I don’t have a lazy $5-10 mil sitting around, I was just wondering if anyone out there might be able to shed some light on the reason behind these comments, before I lash out and buy ‘Trust Magic’. Or should I just ignore them?

Cheers
Ray

TerryW were are you getting these figures from? I’m looking at $2000 to set up a trust and about $2000 per year in accounting fees for its management. This is without a corporate trustee, which will be another expense later on down the track.

Am I missing something here? I sort of hope I am as your prices look alot better than mine.

A self managed super fund is only taxed at 15% but can’t borrow money.

Otherwise consider a discretionary trust so you can choose each year who in your family gets the profits or capital gains. This is no good for negatively geared properties as the losses stay in the trust to be offset against other trust income. They cannot be offset against beneficary’s income. As long as the trust is discretionary the CGT discount can be carried down to the beneficiary.

Companies have a 30% tax rate but do not qualify for the 50% CGT discount. It is very difficult to get the money out of the company without ending up paying tax on it at the marginal rate of the shareholders and less flexability as to who gets the money. Losses cannot be transferred out of the company.

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Hi christian2 & Digger

Hubby and I have got a Hybrid Trust with a Corporate Trustee, which provides the maximum assest protection available. Why do we need to the maximum protection – why not!

It cost us $2700 to set up the Trust and the Company including all other costs such as the accountant, stamp duty etc.

Our research included first buying Steve’s Wealth Guardian, it is my personal opinion that this is without a doubt the best book to buy to understand how investing works in relation to all of your structure options. Then we got Trust Magic by Dale Gatherum Goss (he is also our accountant) and it really tells the full story about trusts. It can be purchased via the link rovided by Melbear or the Property Investor Magazine. We also went to a talk being given by Dale discussing Trusts.

Who know’s why the writer of that article reported that way, it was possibly the people he/she interviewed, lack of research, maybe they were not in a position invest and therefore could not see the benefits of a trust. But it certainly does not fit with the research that we have done onthe subject.

We are expecting to have higher accounting fees this year only because we have got a lot more work for him than before with 4 new properties and the Trust, but as Dale told us the better our recordeds the less work he has to do and the less our fees.

**Few**

Cheers
Leigh K

Carve your own path and lead the way …