Should I transfer the IP to a DT?

The best piece of advice would be to speak to a good accountant because there are a lot of things you need to take into account, and you want to make sure you get it right now or you may pay a heavy price down the track.

A few things to think about though:

1. Are the properties negatively geared? A discretionary trust (DT) can’t use the losses (except in some circumstances) so the negative gearing benefits are lost. This is one reason to speak to an accountant for proper advice. Other structures (eg – unit trust) may be a better option for negative gearing.

2. DT’s also do not get the land tax threshhold (roughly 400k in NSW). Its common practice to buy a couple of properties in your own name first to use up the threshhold. Land tax on 400k is around $6,400 pa which adds up over the life of your investment!

3. You will be up for stamp duty and CGT when you transfer to the trust. Using the 400k example above, thats $13k stamp duty plus CGT.

4. Regarding the development – asset protection, liability, and tax planning would be important issues here. DT’s provide a great deal of flexiblility in this regard.

btw, having a corporate trustee won't assist in the claw back provisions. But it would assist if the trust is sued.

hi ST

At the end of the day it is bankruptcy which you are really trying to protect yourself from. If you are sued and lose then the other party will have a judgment against you for an amount of money. They can then try and get this money out of you by using a few different methods such as garnishing bank accounts, forcing the sale of properties you own etc. The final one (or even the first) is trying to make you bankrupt.

Once you are declared bankrupt then a bankrutcy trustee will step into your shoes and then try to get as much money back for the creditors as they can. They may look at past transactions and may examine you in court about these,

Depending on how you answer and structure things and the size of the transaction then they can try to reverse the transaction. Different time periods apply for different siutaions. eg if you know you are going down and then transfer you house to your wife for $1 then this could probably be clawed back indefinitely. If you are currently solvent and transfer $100,000 to your trust as a gift then this could possible by reversed for 3-5 years etc. If you sell to your trust and the trust pays you market value then there may be nothing to be clawed back from this transaction, but they may look at where the funds from the sale went.

I am just going from memory here, but I think if you look at the bankruptcy act at section 120, 121 then you may find the answers. I am away at the moment.