hi everyone, Have been reading Pete wargents books and am very interested in adopting his strategy of buying regulary in index funds (after a lot more research on the matter) I would be looking to do this with approx 10% of my pay each fortnight. could I create a family trust (with a corp trustee) and just gift this amount each time and buy these through the trust? ideally this wouldn't be accessed for 15-20 years and by that stage I was hoping to distribute the dividends' to me and my partner. is this possible? If so any advice? thanks KJB
Usually better off lending it to trust than gifting, but seek advice. Benefit of lending over gifting is that one day in the future the trust can pay you back
Depends Greater protection against creditors if you gift it. You can borrow it back if needed or make a capital distribution.
Thanks @D.T. will be approaching @Terry_w in the near future get independent advice. One thing I'm a bit lost with is that if I lend to a trust don't I have to start paying myself back plus interest or interest only straight away (in repayments set out in a loan agreement?) and if this is the case wouldn't I be better off at least for a few years to gift monies so I have enough invested to earn enough dividends to pay myself back plus having some left over to be reinvested and help it compound? or would it be better to loan a sum large enough to cover interest leaving funds to reinvest and help compounding and then to revert to smaller frequent amounts? again will be seeking advice, some info in the meantime would be great Cheers KJB
If you loan you could do it interest free. But you have to worry about the limitations act as the loan could become unenforceable after x years - 6 or 1 usually.
From memory s14 and 54 limitations act NSW. Thst should have been 6 or 12 years. Depending on whether agreement was by contract or deed
It would be a contract - oral contract so 6 years after the date of last transaction it would be unenforceable. You can refresh this by putting the agreement in writing.
If the trust produces income which is reinvested then that becomes an unpaid present entitlement. There may be no asset protection on that v's the capital gifted as corpus into the trust. eg Mrs Millie could demand Mr Millie or Millie Pty Ltd payout the unpaid accrued income which accumulated year on year. And I reckon most lawyers would have a crack at the trustee and argue a sham regifting was coercive and intended to defeat a claim even if the beneficiary releases the unpaid entitlement annual as a extra gifting amount. Puts the whole subject of gifting at risk in the family court ?
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