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Setting up a discretionary trust

Discussion in 'Legal Issues' started by Elle15, 17th Aug, 2015.

  1. Elle15

    Elle15 New Member

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    Sydney
    Hi all

    I’ve been reading a lot of the posts on both Sommersoft and PropertyChat. We are hoping someone can help us out with below.

    My Grandmother passed away and my Mum was left with about $300,000. She wants to invest in property with her husband and 3 adult children, instead of just giving us the money. I first spoke to my accountant about setting up a trust and am still not sure on exactly which way to set this up.

    This is what I’m thinking so far:

    I will be doing most of the work for the trust (setting it up, finding properties to invest in, dealing with management agents etc). The plan for the trust is to invest in property around Australia.

    Discretionary Trust with 4 Primary beneficiaries (Mum, me, my brother and sister), secondary beneficiaries will be my father and my husband and we need to set rules for when my brother and sister have partners, or any of us have children, or hopefully never ex partners etc.

    Trustee: Company

    Directors of the Trust Company: Mum and Dad, they will guarantee any loans. All their assets are in both names so I think we should go with two but happy to be told otherwise.

    Settlor: Lawyer / Accountant.

    Appointer: Not sure this is required in our case – or should this be me?

    Further investment: Each of the 4 Primary beneficiaries have agreed to invest an additional $100 a week.

    What does everyone think? I know there is a lot more to think about, and we will seek professional advice, I just want to get my head around some of it so I know what questions to ask. Is there any glaring problems with what we are thinking so far?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Read my legal tips for starters. I have written heaps on trusts. Not good to have 2 directors.
     
  3. Elle15

    Elle15 New Member

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    Thanks Terry, I've read your book and we are probably going to come and see you for some more help.

    As my parents own their assets together, I didn't think it would make much of a difference if they were both directors, and I thought this would make it easier to borrow. I am happy to change this just to Mum though.

    Are you able to provide a guide as to how much it would cost to set this up? I can answer about half the questions on the check-list at the back of your book. Thanks for writing/ providing it by the way. It has been a huge help!
     
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  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes makes a big difference as one director means one giving a personal guarantee which means
    less risk and greater potential borrowing power.

    How they get the money into the trust also needs planning. Gift or loan.
     
  5. miked

    miked Well-Known Member

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    Where are your legal tips?
     
  6. D.T.

    D.T. Adelaide Property Manager Business Member

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    In the legal section
     
  7. miked

    miked Well-Known Member

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    Herp... saw this post from the 'New Threads' and click Legal Issues to see it full of the tips!

    Where is the book then :p
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Location:
    Sydney
    Free download at
    http://propertytaxsolutions.com.au/
     
    miked likes this.