can an accountant set up a trust?

Went to see my accountant today and he advised me to change the ownership of my business from sole trader to a trust with company as trustee. Mainly due to asset protection and tax saving.

I remember reading on SS or property chat (can't recall which one) that a solicitor should be used to setup trusts and not an accountant. Does this sound right or have i interpreted it incorrectly?

 

Accountant for tax planning but solicitor for the legal aspects

 

@Scott No Mates thanks for the reply. So what i read was right? Any reason why not to use an accountant to set one up?

 

@Hodge - If the goal is asset protection, then a solicitor is in the best position to advise/set up the trust deed @Terry_w however it's best to have both in a room to address all issues.

If you're after advice, best not skimp on it and stuff it up (which is more costly to rectify)

 

No, but often accountants will order it (with the solicitors) on your behalf.

 

An accountant can only advise on the tax aspects. They will get a deed prepared by a lawyer and put some names in - but cannot change anything or advise on the terms of the trust or even who should take what roles.

If you want asset protection advice see a lawyer. Asset protection involves advice in following areas of law
Conveyancing act
bankruptcy act
corporations act
trustee acts
family law acts
succession acts
common law
equity
litigation

I have seen people with trust set ups that offer virtually no asset protection at all.

 

Sorry don't agree..
@Hodge
Accountants (any that are worth their salt) provide structuring advice on a daily basis...
30% of my workload is advice on structure and re structuring.
Correct the accountant acts as an intermediary and gets the deeds prepared by an external company, such as Top Docs or ACIS Etc

So yes your accountant should be able to facilitate the establishment of a trust for you.

If not PM me...

 

Thanks to everyone that replied - it all makes sense now. I can't remember the exact figure but accountant quoted me $2200 to set up and roughly the same cost to maintain each year. Seems to me I'm better off staying as i am as any tax savings is eaten up by fees and on going costs to manage the trust.

 

Depends on the accountant, some are fine with this.

 

Most people go to their accountant to set up these types of structures. The accountant gets a solicitor to do it, which really means in most cases they simply take an off the shelf product and get the accountant to sign a few documents. $2200 for the bill seems about right for a company and trust.

Make sure you understand why this structure works best for you and your longer term goals. Trusts are very useful if used properly in this context, but it's not the best structure for every business. Make sure the accountant understands where you intend to go with this business and plans accordingly.

 

There is no legal basis for an accountant or a tax agent to set up a trust. There is caselaw stating that this is legal advice and it is unclear if a non-lawyer's PI insurance would cover any stuff up.

Accountants will no doubt object to this view, saying they are not providing legal advice, but just ordering - but why use an accountant (and not a hairdresser) and not go direct to a lawyer?

 

If you want asset protection did your accountant tell you about the anti-avoidance provisions in the conveyancing act, and the bankruptcy acts - s120,121,etc and how to structure the transaction so as to improve asset protection.

Also as Sim mentioned a trust may not be a good idea for a business - A company with the shares owned by a discretionary trust may work better - shares can be sold rather than the business.

 

@Simon Hampel Yes i will be trading inside the trust. All other asserts (properties) are in my name and wifes name (50 / 50). I won't be holding any other assets in the trust.

Not really sure on the exit plan this stage as not sure anyone would purchase the business. I think it would be more beneficial if i sold off the machinery rather than the actual business.

The whole structure was brought up as a way to save tax and as a bonus asset protection but mainly to save tax.

It just seems to me a lot more headaches for little saving.

 

To be honest he may have but after half an hour it all became a blur!! Easier to learn Chinese in week. It needs to be simplified so everyone understands.

 

This is what my accountant told me as well but only if i breach my duties as a director - ie trading while insolvent.

I guess at the end of the day it's a matter of how deep are their pockets.

 

Check with your accountant and a lawyer, however if it is only likely that the machinery will be of some value, you might consider two entities. One to run the business and one to hold the assets such as machinery if they are valuable. One entity could lease the equipment/machinery to your business entity that provides the service, product etc. This might seem like overkill however if your business gets sued your (valuable) equipment may be at stake.
This isn't advice, merely opinion, however maybe worth asking about.