Hi,(I know this has been asked before but there may be new tax rules that Im not aware of etc..)
Are there any books or guides as to how to set up a trust?
Obviously I will set one up through an accountant but I just need a 'thumbnail sketch' of exactly what the trust looks like (a picture would really help!)- i need an understanding of what it is before i go to the accountant.
and some pros and cons would be great too.
Thanks very much!
Not really.
Trustmagic.com is a book of trusts for the average property investor.
There is a lot to it. Actually a trust can be set up in mins very simply but setting one up in an effective way requires careful planning.
You need to consider many issues such as:
– who will be trustee or who will be director of trustee company?
– should you have a company or person as director?
– should you name beneficaries? and if so the lending consequences.
– Who should be appointor
– planning for the death/bankrupcty etc of appointor.
– asset protection issues
– income tax issues
– CGT issues
– Estate planning issues
– Borrowing issues
– duties of trustees
– rights of beneficiaries etcetcThere is a lot to it. Much more than the average accountant will realise or explain to you.
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
Thanks!
i just ordered that book.
id like to know Steve's opinion of trusts these days as i went to a seminar a couple of years ago and he suggested that you use set up a trust for every property, including your PPOR.
is there anything on this site about trusts from Steve?
If not- Hey Steve! write a guide about trusts and I'll pay money for it! ha! Theres a business mandate if ever I heard one!
any more advice on trusts is welcome- please add:
Generally not a good idea to buy your own home in a trust as you will lose the land tax exemption, main residence CGT exemption and will end up paying tax on the rent you pay to your trust.
But it can be a good idea in some cases, such as where you already have another property which you are claiming as your main residence and only intend to be in the trust property short term.
I think Steve has a book on trusts or structures in general for sale.
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
I'm not an accountant, or a solicitor.
But what has worked for us, is to have properties held with the same strategy, in the same trust. eg Trust 1 for positive cashflow with us as trustees.
Trust 2 is for developments, and has (our) company as its trust.We have been advised not to hold "too many" properties in the same trust. In our case, we'll limit that to about $1.5m value or max 4 properties.
If you intent to give any profits to charity, you need to name that charity as a beneficiary of your family trust, when you set it up.
This means you can give pre-tax $$ to charity. Otherwise you have to give the money to yourself, pay income tax, then give the money to charity.From my (non-professional) understanding, a Unit trust means all beneficaries must take equal profits. eg 4 trustees get 1/4 each. Then they all pay tax on their individual annual income (eg $70K job plus $20K trust to that one 0person, theypay tax on $90k total income minus any deductions.
A Family trust can be "discretionary" ie choose who gets the profits. So a husband who is on a high tax bracket from his job may not "take" any income, but his part time worker wife may take all the profits so they don't pay so much tax. If you have children, you can name them as beneficiaries but don't ever have to give them profits. (You can decide year by year.)Hope this helps, but clarify all points with your accountant first. (It is an accountant who sets it up.)
If the accountant doesn't know, change accountants!quickchick
After setting up a Trust Company-
what is the procedure from transfering real property to the trust?
do you need to officially transfer through lands titles office.
are you require to pay stamp duty on a realistic valie of the propertyTao
taogofers wrote:After setting up a Trust Company-what is the procedure from transfering real property to the trust?
do you need to officially transfer through lands titles office.
are you require to pay stamp duty on a realistic valie of the propertyTao
Yes and yes. The legal owner needs to change on the title, and you will pay stamp duty at market value on the transfer.
In other words, buy the property in the Trust in the first place! Or waste a lot of money, in stamp duty and conveyancing.
If you are putting in an offer and need to set up a trust in a hurry, you can put your offer in as "Bill Smith and/or nominees".
Trusts can be set up within about a week usually.If your property doesn't make you money, (ie cashflow positive from day 1), ask your accountant if it is worth buying in a Trust.
(Maybe not) as it costs you $ each year to maintain a Trust.Watch out for and/or nominee. If you have not formed the trust before entering the contract you could be up for double stamp duty – check with your solicitor first.
Trusts can be set up in a few minutes.
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
Agree with Terry on that one.
Qld for one did away with And or Nominee Clauses and avoiding double Stamp Duty.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Quick note just to say that I loved the book Trust Magic…pity I lent it out to someone and never received it back…
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