In need of a property specialist accountant

Hi all,
I know I am behing the 8ball with this.. but am in need of an accountant who is particularly savy with property asap.
I would like advice and whether to attempt to change our contract on a property (unconditional on this Thursday ) from our personal names to a trust setup.
It is a 45 day settlement.
Obviously will be checking with solicitor whether it is even possible to change the contract to be in our family trust. (No finance involved so don’t have to worry about that).

Will explain why in further detail later.
I also want to use the accountancy services as an ongoing service for this next financial year onwards.
Thanks
Kate

 

Sounds like you need a lawyer. A trust is a legal relationship.

 

I am an accountant and will tell most people why a trust probably isnt worth doing or weigh up the benefits vs costs. And then recommend a solicitor to finish the discussion. I assume its QLD...so

Speak to Daryl Richards at Certus Law Brisbane and save the time. He does conveyancing anyway so two birds with one stone....

 

I know that a lawyer sets up a trust.
But what I wanted to know was the benefits vs cons of a family trust structure for my circumstances.
This property is hugely positively geared as I don’t have a mortgage on it.

My husband doesn’t work right now, and so I wondered if having a trust with myself as the trustee only, would mean that I can continue to borrow for further properties in my name only.

My PPOR is in my name only and doesn’t have anything left owing on it. Then if I had this property also in a trust with myself as a trustee, I could borrow in my name (as with my PPOR) and gift it lend the money to the trust.

In the future when husband has a new job, he is still a beneficiary on the trust .

Capital gains can later on down the road be split between us from what I read.

 

However, I also want to do renovations so need advice on how to go about this for my situation (being positively geared with no mortgage).
Therefore also looking for an accountant in general.

 

This is something you need legal advice on. You can read my tips in the legal section for general ideas.

You need legal advice on whether a trust is suitable, land tax, structuring the trustee, structuring the trust, terms of the deed, asset protection, estate planning, etc etc.

 

Better to ask this before you have a live contract?

 

And do what? Unless the trust pays you interest you can't deduct it personally, and if the trust pays you interest it might not be positively geared. Even thinking about personal trustee tells me you shouldnt use one.

 

Usually if you purchase under trust with cash and hopefully your trust has no vesting date then you are protected but this is a general comment only, it is impossible to advise as there are trusts and trusts and it really depends what you wish to do with the IP, to redevelop, to keep, to pass down, to offset negative gearing????

Usually I wouldn't buy under a family trust if you run a business from it and derive income I keep investment trusts separate just for those purposes with no vesting date, family bloodline for estate planning, etc.... the advise below was for me but in general can benefit many if in similar situations. Please note this is general information only not advise, you need to consult your own specialist based on your situation!

Some benefits with trusts:

1. Trusts. This can give you the best of both worlds. A trust gets the 50% CGT discount and depending on what trust gives you flexibility. If on wages you would use something like a Property Trust to get negative gearing in your name. If property is cash flow positive or you have business income for distribution then you could use a discretionary trust which gives you asset protection, flexibility on who receives distributions and improved tax benefits. Another advantage of the discretionary trust is you can change who controls it ie to other family members without a CGT or stamp duty liability.
   
2. The tax act allows a distribution from one family trust to another to absorb losses if the trusts are part of the same group (family trust election). Ie from Business Trust to trust owning the investment property if negative geared.
3. If you operate out of a business and produced sufficient business profits then the use of the Family Security Trust™ to hold property would be recommended. Any negative gearing can be absorbed by a distribution from business profit trust distributions. Note if insufficient business profits available to absorb all the negative gearing would mean that those losses would be trapped in the trust until the next available distribution but the bank etc would still need to be funded with after tax money (not attractive). The next distribution would be used to absorb any prior years losses and the cash would then be used to pay back your prior loan in the previous period. The FST will give you increased asset protection, flexibility and taxation benefits in that you are using pre tax income not post tax income:
   1. The main benefits of the Family Security Trust™ over standard family trusts are:
      1. No vesting date which means trust does not stop after 80 years which would normally trigger capital gains tax and stamp duty depending on asset.
         
         
      2. Lineage clause which protects capital to the lineal descendants of the original beneficiaries.
         
         
      3. Just to reinforce additional benefits of a discretionary trust which the FST also enjoys.
         1. Within the same family group you can distribute pre tax profits from the business trust to net off against any losses in the trust holding property ie where the interest and other costs are higher than rent.
            
            
         2. Sale of an asset in the trust also receive the 50% general discount if not distributed to a company.
            
            
         3. You can change control of the trust without triggering CGT or stamp duty thereby effectively passing over the property in the trust to another family member at any time not just on death.

 

Beware of any trust with a trademarked name, especially one set up by accountants!

 

Fomatting gone all wrong. Can hardly read half of it

 

Agree, each trust should be specialised to own circumstances and the stage in life we are in hence impossible to ever advise or answer about trusts in general!
Super trusts, LRBA trusts, family trusts, protection trusts, testamentary trusts, etc,...
Once my close young friend asked me if she should have a trust being an employee, so I asked her, what do you want it to do what is it for, for investments, are you setting up a business, for SMSF, to date I am still waiting for her answer.....?
People just sometimes hear it is good but don't understand whether they really require it.

 

People have no idea about trusts. There are so many misunderstandings out there its not funny. I have been studying trusts for about 15 years now and am still learning new things every day.

 

Loads of generalisations in this uncited information. The source of the Family Security Trust (Trademarked my apologies....) should really be provided if its a proprietary product (I can only find a US law firm link)

Stamp duty WILL impact a QLD trust and other real property held on trust in some state/s if control is changed or altered. Control of a trust is more than Trust elections. Then the asset protection risks and concerns, which state ?, land tax, CGT, income tax, small business concessions, related party leases and many other matters are all part of the advice surrounding a trust.

I have encountered in recent years three clients with bloodline type trust limits and all 3 later asked the question about expanding distributions to non-bloodline relatives. The issue of bloodline relatives who may otherwise be eligible beneficiaries under a family trust election and the deed which limits beneficiaries may be very restrictive in some instances and its not a simple matter of "just amending" later. Of the 3 two had serious issues as they had distributed to non-bloodline relatives. One was emboiled in a family court issue and the trust pose no protection v's the former wife despite belief the deed was robust. The divorce lawyers just rolled their eyes to the suggestion it safeguarded a claim.

I will likely cop some abuse over this view(which I make as a tax adviser who encounters tax issues) but here goes...I have never seen a bloodline trust that wasnt quite expensive. I question is its just a complex ploy intended to promote complex and confusing benefits that are rarely accessed or available but more a way of upselling cost. The paint protection scheme of trust deeds.

I see Simons point however I cant help but feel that the best course of action is most certainly a lawyer giving prompt advice with a time critical issue of considering a change of purchaser to an existing contract. The simple issue of whether the trust CAN acquire a property in one name and now a trust is formed after that date is a issue that must be given legal advice. Its like asking if you need to see a Doctor and what may happen if you dont after severing a finger.

 

agreed. @Terry_w answer was quite helpful and appropriate. the OP said he had a 45 day settlement. talking about XX and YY would have been awful.

 

Changing the buyer cant be done last minute however. Normally before exchange. But thats a legal question too. I believe his suggestion to seek legal advice is ....sound legal advice

 

its a bit like saying I don't feel well what is the solution.

The only answer should be 'see a doctor'.
Saying something like take a panadol may be bad advice, and asking questions such as does your head hurt? may be unproductive.

If the OP wants to ask a specific question I can answer it, but a vague question such as should I use a trust could only be answers after considering all the clients personal financial and family situation, future plans etc.