Asset Protection loooong term!!!! IS a trust the way to go?

There are quite a few threads on this topic, do a search.

Or even better, go out and buy Steve's new book, he has a dedicated section on trusts.

Alternatively, the best advice you can get is to see a seasoned accountant that has experience with property investing clients.

Cheers,
Miike

I have a friend who is going through this situation (as the son in law) and truthfully it frustrates me. Your son/daughter has chosen their spouse for (hopefully) good reasons, and one of the important things to them will be you placing your trust in that spouse.

When you get married you decide what’s mine is yours and what’s yours in mine. By giving a gift that is limited to only your child and not his/her spouse you are indirectly causing a violation in their decision to each other. They are now living as one unit, one family unit, and I believe it is important for parents to recognize that.

At the end of the day I believe it is more important for your child to know that you approve of their spouse in every way (no matter what happens, even if they eventually get divorced) than trying to protect whatever gift you may be giving and nullifying any trust you place in your child to choose the right spouse.

This is obviously something I feel strongly about. I know I wouldn’t be where I was today if my wife’s parents didn’t trust me to take complete care of my wife. If they were to offer a gift, but it contained the limits you want to put on yours, I would see that as a personal offense and would refuse it.

I don’t expect you to take this advice, or even agree with me. I understand the need to protect your finances from poachers if it is a lot (which at the moment I don’t know if it is…A few million dollars in a few decades will be chump change because of inflation.

Think about the money….yes….but think more about the relationship with your new child in law and what that is worth. I would trust my child enough to give the gift to BOTH of them.

Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click Away

Also look into setting up a Ltd company.

Company is set up as trustee of the trust. The trust buys your investments. You (and others in your family) are the beneficiaries of the trust. You are also the company director (along with wife/partner). If you die there is no change to anything (wife/partner are still beneficiaries). The company is controlled by wife and the so she indirect controls the trust and therefore who gets the profits generated in the trust.

More details in the book I referenced above.

As I said, I’m not an accountant or lawyer (just reading a book written by accountants – see book reference earlier)

The only thing about a testamentary trust is that it “quaranteen” any losses you make (means that if your properties make any losses you can’t claim them until they make a profit – so if your strategy includes negative gearing, you can’t claim tax on the loss until it becomes CF+).

According the the table on p112, this also applies to Family, Discretionary, Testamentary, Capital Vested, Child Maintenance and Self Managed Super fund trusts.

Does NOT apply to Unit, Hybrid, Bare and Property Investor trusts (but these have other pros and cons).

Great book – read it and find out (shame I’m not on commission!) and then check with someone qualified !!

Ah ha. I’m still learning (as expected).

Don’t want to hijack this thread but do you know anything about the Property Investment Trust? (is there another thread on this subject)

Lots have changed since that book was written! There are a few old threads here about the PIT and the author of the book posted too. Mr Chan – forget his first name.

Hi Mark,

A trust is definitely the way to go but it is important that the trust deed be worded in a specific way so that the assets held within the trust are exclusively for the benefit of the family tree line.

Some people refer to this type of trust as a "bloodline trust" as it keeps the assets within the bloodline of the family.

Based on my experience with clients, divorces can get very nasty and this should definitely be something you should look into.

Effectively the "bloodline" trust is in many ways similar to a normal discretionery trust but it does contain a few extra clauses which ensures that the assets will always be controlled by members of your immediate family.

A good lawyer is essential in setting this up (as apposed to an accountant) as a trust deed is essentially a legal document which requires their expert guidance.

Depending on where you are based I could recommend a few good solicitors in this area.

Regards

number8

Didn't think it was directed at me so no offence taken. Just couldn't see which post you were referring to.