Can anyone shed some light on this issue:
As far as I am aware when assests are held within a trust the trust itself does not own them. It is a requirements that a seperate legal entity owns the asset e.g individual or company. Seening as an individual or company can be the trustee one would assume (making an ASS out of U and ME) that the trustee then owns the assets. However in the same breath have also been told that the trustee is not the owner of the asset. but is the legal owner of the asset[weird], and the beneficeries are not the owners but entiled to % or an amount as prescribed by the trust deed.
Can ANYONE clarify who the heck owns the Asset within a trust?
What is the difference bewteen not being the owner of the asset but being legal owner of the asset?
Thanks
MulderThere are two ways to own an asset:
1) Legally
2) BeneficiallyIn a trust, the assets are owned by the trustee legally, but a owned by the beneficiaries beneficially.
eg. Say I buy a proeprty in your name. Maybe the house next door is forsale and I don’t want them to know it is me negotiating. I buy it in your name. You are the legal owner, but it is mine. You are the trustee and I and the beneficial owner. (this would be a bare trust).
Terryw
Discover Home Loans
Parramatta
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Hello Terryw
But whose name actually appears on the title.
Is it Elkam (or Company XXX) ATF YYY Trust.?
I assume that the relationship between the person or company to the trust is documented on the title somehow to distinguish it from a personal ownership?
or it it just XXX trust.
Thanks
ElkaThe name on the title would be XXX Pty Ltd (assuming that it ia an adult shop),but a minute entry should be made in the company that it was purchased “As Trustee For the YYY Trust”.
CATA
Asset Protection Specialist
[email protected]Thanks for the replies thus far.
From reading the responses I have come to this conclusion:
The trustee (individual or Pty Ltd) would purchase a property on behalf of the Trust (and sign the contract as such). The trust effectively owns the property however in the event of a problem (i.e Trust not being able to pay mortgage) the trustee has LEGAL ownership and would then be responsible to make good the payments.
Can anyone confirm this???
I also have one other question.
If one of the beneficiaries of Trust A is Trust B what is the tax implication for passing income from Trust A to Trust B and holding a portion of that income within Trust B and passing some to a beneficiary of Trust B?
Hope I haven’t confused anyone.[biggrin]
Thanks
Mulder
The title is in the name of the trustee. There is no mention of the trust anywhere on the title. Some then place a caveat on the title on behalf of the trust to make sure it can be easily proven to be trust property, if need be.
The trustee owns the property on behalf of the beneficiaries. If the trust does not make its mortgage repayments, the trustee will personally have to because of the personal guarrantee they have given.
If Trust B is a beneficiary of Trust A, then it can receive income distributions. Just think of it as another person. Income could be retained in Trust A, but the trustee has to pay penalty tax on any income that isn’t distributed – I think it is 49%. Other than that, I think that there are no special tax implications, unless one trust has a loss.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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