Hi all,
I’m in the process of setting up a company that will act as trustee for my discretionary trust.
My wife and I are both currently listed as trustees for our trust, and this new company will replace us.
My question:
I’m filling in the forms to incorporate the new company, and I was wondering if I am correct in saying that I want me and my wife as directors, as well as both of us as equal shareholders?Or would it make more sense to just set it up with me as the director and sole shareholder, as any income generated by the trust will by distributed to the trust beneficiaries anyway (thus my wife will still get distributions from the trust income, and thus has no real need to be a director or shareholder of the trustee company…)
From a lending perspective, to maximise our borrowing capacity, does it make more sense for both of us to be directors, so that we can both guarantee the loan (effectively increasing servacibility)? In this instance, would we also both want to be shareholders, or just me, or just my wife?
If the following additional info helps, within 2 years my wife will not be working, and I will be earning a salary (potentially also as a company director at the small firm in which I work) in an industry with potential lawsuits (found out the other day that our company has been sued twice in the last 3 years!)
I guess the final question is, how do I physically swap the trustees?? Do I need to “have a meeting” in which this swapping is an item of business that all of the beneficiaries agree upon and sign? Or are there forms and other legal documents to play around with…
Any advice on this would be greatly appreciated!
Cheers,
.
Hi aaabbbccc
Sounds like you need some professional help.
Having 2 directors of a company is not a good idea.
Working as a director of someone else's company is also a very dangerous proposition. If you have any assets now you should take measures to protect them thoroughly. Watch out for personal guarantees, when applying for credit they often ask the director to guarantee. Remember most companies go down and if you are director and it goes down you will probably have problems getting finance for the next 5 years.
As for changing trustees you should read you trust deed and see how it is done. It is usually up to the appointor to appoint the new trustee and the old trustee resigns. This needs to be done properly with a minute of the meeting etc.
Also with finance you can get someone other than a director to guarantee the loan. There is no need to have 2 for finance, and you shouldn't. Watch out for naming beneficiaries on your deed too – although yours sounds like it is already set up.
If your trust has assets already you will have to arrange for title to be transferred to the new trustee too.
Might be better to just set up a new trust and keep that one for shares?
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 Terry,
Thanks very much for the advice!
So am I correct in thinking that if I set up a corporate trustee, that I should be the sole director and shareholder, and that this company should definitely do no trading?
And once this company is setup I should ‘hold a meeting’ in which I (as appointer) add my company as a trustee to our trust, and also resign as trustee myself (and my wife also). This will leave the old and new trust structures looking as follows:
OLD STRUCTURE
Trustees: me and wife (both named in full)
Appointer: me
Beneficiries: me and wife (both named in full)ACTIONS:
me: set up new company with me as director and me as shareholder (no mention of wife anywhere)
appointer (me): adds company as trustee
me: resign as trustee
wife: resign as trustee
all of this noted as a minute and stored within the trust documentationNEW STRUCTURE
Trustees: New company
Appointer: me
Beneficiaries: me and wife (both named in full)Also you mention to watch out for naming beneficiaries within the deed. As both my wife and myself are named by our full names, will this present any problems?
Finally, do you really think it’s worth starting over, or will a simple minute as detailed above achieve most of what I want? I currently have no assets within the trust (only a bank account and a comsec account).
Cheers,
Thats a good way of doing it I think. Have you read the deed and made sure you are complying with the rules of the trust.
Naming beneficiaries can mean some banks will require a guarantee from all adult named beneficiaries – ie there is not choice, which ideally you don't want.
You will also have to change the bank accounts.
ANd you should check with your lawyer before doing anything.
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
You must be logged in to reply to this topic. If you don't have an account, you can register here.
