ASSET PROTECTION = BUY IP AS TRUSTS?

Can you buy and sell shares actively (every few months) in a trust?

Can you start a trust in anticipation of holding investments (ie. buying an IP) in it? Of do you have to buy the IP first and then start up a trust to put it in?

What if I live in NSW but I buy an IP in another state?

Do I buy the IP in my individual name? or the trustee’s name?

Thanks.
Terroni

Toni Cooper

Thanks Terryw

Is it correct that if I am a trustee I can’t be a beneficiary?
Hence I would probably then set up a company as trustee. And then I can be a beneficiary?

So I can have a trust set up in NSW and buy QLD property via that trust?

Thanks again.

Toni Cooper

A trustee can be a beneficiary.

Terryw
Discover Home Loans
Parramatta
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Terry and Cata
You guys are awesome. Very forthcoming with info, even though there may be no financial reward.
May good karma come your way ten fold…or at least someone send you a case of beer

Just curious,

Regarding paying of additional stamp duty to transfer IPs into a trust, if the IP is in the US, where there is no stamp duty payable on purchase, how does this work? [eh]
Is it just a straight forward transfer into the trust?

cheers
Laurence

Hello Trust Gurus

Yes, I know that I need to seek professional advise but since some of you are more clued up than most professionals, I thought I’d go to the source. [biggrin]

I have a family DT and a company which is trustee (I’m a director of this company ). If I wanted to set up another DT to hold other IP’s would it be nescessary/safer to set up a second company to act as trustee to this new DT?

There is a new land tax law in Victoria which I believes says that any property bought after 31 Dec 2005 and “owned” by a DT is subject to a surcharge. My question is, doesn’t this make it less attractive to use a DT? Should I be looking at another sort of trust.

Thank you
Elka

Thank you for your answer Cata.

I assume you don’t own property in Victoria Cata because if you did you’d know about the new law. It’s savage. [grrr]

For a DT, you get a one time chance to nominate one of the beneficiaries as being responsible to pay the land tax for property held by the trust. This is then aggregated to any property this person holds privately (except PPOR). Any property bought after 31 Dec 2005 does not get this chance and pays the surcharge. Not nice at all. [glum2]

This is not so for fixed or unit trusts if the SRO has been notified of the unit holders. It then just “looks through” the trust .

Actually I think I will start a new topic about land tax minimisation. I assume it’s legal.

Cheers
Elka

Hi Elkam

I would not use a unit trust to purchase property. The simple answer is because if I had $1 mll in property inside a unit trust, and there are two units from the trust, What is each unit worth?
$500 000. It’s far to easy to determin who owns what in this type of structure and it give little asset protection. Unit trusts were just deemed a special trust. This means the land tax loophope is now closed from a unit trust.

Needless to say, a unit trust has it’s place but not for personal property investing IMOP.

Hi Toni

Do you have enough in your superfund to purchase an IP?
This will reduce your CGT when you sell and save the trouble of transfering the profits into the superfund later. The downside is that a superfund can not borrow money.

A discretionary trust can distribute all income including CGT. Keep in mind that if the money is distributed from the trust before June 30 the tax is payed at the beneficiaries marginal tax rate.
You will get the 50% CGT discount and then be able to distrubute the rest to the lowest income earners. Using this stratagie there should be no more than 30% tax on the taxable portion of the profits(maximum).

If you can understand this then you will understand the extra benifits using a discretionary trust.

There is also Asset Protection and Estate Planning benifits of a trust that must be taken into consideration.

CATA
Asset Protection Specialist
[email protected]

Thanks Cata. When you put it like that it seems obvious. [blush2]

So DT’s are the only way to go ?… except for the hefty land tax surcharge in Vict? Any other options available?

Elka