Hi Guys
i have a situation whereby my father gave me my inheritance early – land, and set it up in trust.
However, the accountant, his wisdom, set the trust up as my children being beneficiaries. At the time of writing, I was not married, nor did i have children and neither were on the menu.
My thoughts were that the firm should have been made accountable and altered the wording of the trust to have my name in it.
As it now stands, we have a house worth around $300k, with a mortgage of around $178k on land worth around $900 and we cant do a thing with it.Any advice on how i can start investing WITHOUT using my home as equity would be great as my husbands line of work, although fantastic, i think will slow down as his injuries increase so we need another income….
Thanks in advance
Hello fisky
Have you had your solicitor or accountant check the trust deed to make sure that you're right about this?
If it's a discretionary trust (also known as a family trust) it would be most unusual for it to be so narrow that it only allows your children (not yet born) to be beneficiaries of it. A DT usually has specific beneficiaries and general beneficiaries which usually include all relationships you can think of. i.e. parents of, grandparents of, children of, adopted children of, in laws etc. etc. plus………… if it's any good…… companies and other trusts affiliated with any of these people.
I think you may find that you (and your husband) are beneficiaries too.
You need to get someone to explain the document to you as in the deed it also sets out what the trustee is allowed to do. e.g. sell or buy assets, borrow or lend money to the beneficiaries and much more.
If so I would be researching if the land is worth building on or subdividing as at the moment I assume it is not earning any income?
Hope this helps
ElkaHow does the trust distribute profits to non-existent beneficiaries if you are not a trustee and don't have kids? It may not be a problem if the trust does not make a profit but it may if you are paying rent to the trust.
Hi Fisky
Read the deed (they are not that hard to understand) and if still not satisfied the go back to your accountant and have them explain your fathers intentions at the time (there ought to be a file note). If a cock up was made go to the solicitor that drafted the deed and have it amended.
good luck
tony
hi all
thanks for the comments – unfortunately i have been down some of the paths suggested:
the solicitors/accountants refuse to wear the blame – instead wanted to charge my father an extra $10k to amend something that they stuffed up [he didnt even realise it was wrong until i said something – was not happy about it.]it is a family trust with my "kids" as trustees and we cant touch the land [20acres] – even the house is tied up with parents on the loan due to the cockup with the trust as is the only way to tie the land to the house. So we cant move with that.
Which, if we can obtain finance in someway using a property that will be the investmetn prop as collateral, wll be fine.
any ideas?
Out of curiosity, how long ago was the trust established? Is there a Fair Trading avenue on this?
TammyHi I can have a look at the deed if you want?
I doubt that the children are the trustees? Especially if they don't exist!!
They are probably beneficiaries, but if they didn't exist at the time the deed was made then there must be other beneficiaries too?
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
Terry,
They are the sole beneficiaries yes, and didn't exist at time of writing.
Parents are trustees….and are on the housing loan as well because of ihte stuff up.Hello frisky
Have you been to another solicitor for advice about the deed? One who is well versed with trusts?.
If not I would strongly suggest that you do that at once. The situation will only get more complicated (and expensive) with time I would think. This is probably a good time to unravel the mess.Based on the size of the land I imagine that you are in a rural area with perhaps not too many solicitors to choose from.
If you mention your nearest major town or better yet, capital city, maybe there is someone on the forum who could recommend a good solicitor for this purpose.At the same time you can ask their advice about what remedy you have against the first solicitor. I am no expert in this area but I can't imagine what could cost $10K to change.
Making non existent children trustees and sole? beneficiaries sounds like the solicitor is totally incompetent and a letter from another solicitor to that effect plus a threat to lodge a complaint with the appropriate body may make the first solicitor more willing to foot the cost of the changes. My preference would be to have the second solicitor do the changes but if you agree to have the first one do it free of charge then at least get it checked by the second solicitor.
Do I understand you correctly and this land is where you have built your home on? It may be a good idea for you and your father to review the whole situation with the new solicitor or maybe a very competent accountant.
If this is the situation then it seems to me that your home may be unsellable in the future and also that the most valuable component of it…… the land … (at least 1 1/2 acres of it) is not CGT free…. which is a real pity. However if this is a farm that you are working the situation may be totally different. I know even less about this area.
Hope this helps
ElkaSorry. It took me so long to type that our posts crossed.
However, even if your parents are the trustees making non existent (at the time) children sole beneficiaries is still incompetent.Wow
thanks so much to all!!!!Elka, thankyou very much for your advice – I had the same thoughts myself……
We are on 20acres on the southern end of the scarp [near bunbury] which we can agist on so we can earn a small amount there but i want to be independant of parents.I have never heard of Bunbury but had a look on the net. Looks like a lovely place for a visit.
Good luck and let us know how you go.Elka
Hi Fishky
From what you have written It seems that your parents are trustees. They are the legal owners. The beneficial owners are the beneficiaries which you indicate are your children. So if you want to access the equity, then the trustees will need to borrow. It is still possible (depending on the wording).
If you can scan the deed in or fax it to me on 1300130010, I can take a look at it.
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
Hi Fiski
Used to live and work in Bunbury 10 years ago just when the harbour from was being redeveloped. Would love to see it now.
Can recommend solicitor Peter Ray (can't remember the name of the firm) in Bunbury (I understand he left a top tier firm in Perth and moved there for lifestyle). I used him for myself and many accounting clients at the time
good luck
Tony
tony – thankyou for that!
will see if i can contact him
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