Re-investing trust income in a trust

One of my children is about to turn 18 and I will be able to pay her from a DT. I have heard that I can retain that income in the trust (it will be declared on her tax return). If I do keep her funds in the trust are there any legal requirements for recording/distros etc. I would just keep a ledger of how many VAS shares were hers, and any cash balance. Basically this would allow me to keep managing her assets. If she wanted the funds she could take them out, and I would pass the CG through to her return. The idea is that I do so when she wants to buy a place.

I would probably prefer to keep it simple and contine to operate the distributions in a completely discretionary way (so when her sister turns 18) all the distrubutions of the trust would be reinvested in the second childs "ledger" until equivalent etc. Thus I don't want to tag the income from her VAS shares to her (this may mean it looks she does not own them).

Once again I am trying to keep things simple and not have to have them operate their own trading accounts.

Thanks for any suggestions.

 

You dont seem to understand if you say

She may have a unpaid entitlement but that is a fixed sum being her entitlement that is unpaid. It has NOTHING to do with trust property or any income that is later produced. She only has right to that liability. NOT to trust assets. No more. It doesnt need to produce income, be invested or generate a profit. She may legally call for this liability at any time and it may accumulate from year to year but there is no obligation for further income. Can be useful to be paid out with uni costs or a wedding etc... . Alternatively you can pay her after year end for the actual (accounting) entitlement and round robin a recontribution by yourself perhaps to the trust to discharge that.

I dont understand what this means :

It sounds like you dont grasp the accounting concerpts. I do hope the trust will prepare financial reports. This is a great example of why it must do so. (Often a rule in the deed)

 

It would be an unpaid present entitlement which is similar to a loan, except there is no limitation period. Beware she or her legal personal rep can call on that anytime.

But it sounds like you might be intending to hold under a subtrust arrangement and if so the assets bought with that money belong to her.

 

You havent been distributing $416 a year to them?

 

The child is aged 18+

 

The Trust's accounts should look something like this with Note 6 detailing the amount owing to each if they have not been paid out.

 

Bad accounting?

1. Reserves in a trust ?
2. Assets - Liabilities should be net assets. eg 3. Net Equity should be = 3.

 

Are you adding & subtracting note numbers?

 

I have been doing so for both.

 

More than happy to just hold a cash liability with a 0% interest (for simplicity), as well as her or rep can call on it.

 

i cant see figures just note references

 

Thanks. Entitlement to fixed sum would be sufficient.

I had assumed that I had to pay her income out. I would then recommend she invested it in shares to gain higher return exposure. I heard a pod-cast stating that the trust could retain the funds and record a liability. It would be better and easier to keep the income within the trust (for uni fees/deposit) later.

I have no formal expertise in tax, accountancy or trust law. The finacial "report" consists of the value of single LIC and single ETF holding. The portflio balance, and a clear statement of how the income (and all its components credits and CGs attached) flow through unchanged to each beneficiary for their tax returns. (or FC claims for the kids). Following advice here I will also report a liabilty for income attributed to the 18yo, but retained by the trust.

Thanks for everyones comments.