Siblings transferring inherited home to a trust

Discussion in 'Accounting & Tax' started by DubbleD, 13th Jun, 2019.

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  1. DubbleD

    DubbleD Member

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    I am hoping for some advice before we see an accountant/solicitor.

    My siblings and I inherited a family home in Sydney. Unfortunately prices dropped soon after the death of our parents but we are hoping they will rise again sooner or later.

    We are trying to work out whether we keep the property in our individual names or transfer to possibly a discretionary family trust.

    We would like to use the property to buy investments in the future.

    Between us we have a wage earner with dependent spouse and kids who own their own home, sole trader with dependent kids, single, no kids wage earner, and another with a business under a company structure, tradie, spouse with another business, and dependent kids.

    Along on very different incomes. I know trust provides protection in case of individual bankruptcy (tradie business always a risk), or divorce etc. Not sure best structure. Each of us have had different advise. Solicitor suggested individual names. But we keep coming back to asset protection.

    Any ideas??? We are hoping to buy relatively small IP like units and hopefully be positively geared.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    You may need specific advice as to whether you can establish one (or several) testimentary trusts after the death of your parents (@Terry_w may chirp in or have already written a guidance note on this topic).
     
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  3. Gockie

    Gockie Problem solver Premium Member

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    Hi @DubbleD,
    I can't give you advice on your question but I just found this part of your post hard to read. Is this right?

    With your siblings you have:

    * a wage earner with dependent spouse and kids who own their own home,

    * sole trader with dependent kids,

    * single, no kids wage earner, and

    * another who is a tradie with a business under a company structure, with a spouse with another business, and dependent kids.
     
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  4. balwoges

    balwoges Well-Known Member

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    IMHO sell, divide proceeds evenly and invest individually ... your siblings have different needs.
     
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  5. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    How do you know this?

    Have you received proper advice - from a lawyer?
    How will you get the property into the trust? How will the trust be structured?

    It might be better to just sell the property, debt recycle, and buy another.
     
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  6. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    It is possible to set up a testamentary trust within 3 years of a persons death, s102AG itaa36
    But if NSW law applies to this situation there probably won't be any benefit, or not much.
     
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  7. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    To be honest and with all legal things aside. I think it would be best to sell and split the money. I say this because whilst the market might have dropped if you are buying back in with your share then you are buying in at a low point so they kind of negates itself. And also because investing as a group, even a family, can place unnecessary strain on relationships. You never know when a sibling will divorce, lose a job, die or have another child.
     
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  8. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    And not to mention the control issues with a discretionary trust. Who will be the trustee and who will be the appointor? whoever controls these positions controls the asset and its income.
    2 choices
    a) all the siblings unanimously, or
    b) all the siblings majority
    c) ignore this = the most common option, but not recommended.

    When a unanimous decision is required this could cause a mexican standoff, a stalemate with the trustee unable to make decisions.
    When majority, 2 could gang up on the third.

    If you really want a discretionary trust to hold the asset, perhaps 3 trustees of 3 separate trusts, each controlled by one person.

    But first get some proper legal advice, especially on land tax.
     
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  9. SatayKing

    SatayKing Well-Known Member

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    But first off remove any emotional attachment to the thing because that is what it is; a thing which is replaceable.
     
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  10. DubbleD

    DubbleD Member

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    Yes that is correct so all very different stages in life. For the tradie protection is important. So not sure we should set up in our individual names rather than trust.
     
  11. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Do you realise that stamp duty would apply too?
    It would be a CGT event, but if the main residence of the parent then it would likely be CGT free if transferred within 2 years of the death.
     
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  12. DubbleD

    DubbleD Member

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    Yes still under 2 years. Need to decide soon
     
  13. DubbleD

    DubbleD Member

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    Unfortunately not able to sell at the moment, due to circumstances of a sibling living in it.
     
  14. DubbleD

    DubbleD Member

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    That is a hard one. :)
     
  15. DubbleD

    DubbleD Member

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    One siblings lawyer suggested to keep on individual names but I don't believe he has consider all our circumstances. Only looking at one. He handled the estate.

    For one of us, married tradie, in our state, building & construction is a high risk area which can have some financial issues. Unfortunately lots of small companies going under due to non payments which happens a fair bit. If it were to stay in our individual names the property could be at risk.

    I think we need a different lawyer.
     
  16. DubbleD

    DubbleD Member

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    Thank you everyone for your help. Probably need to go back to solicitor or a different one who will consider all angles.
     
  17. Perp

    Perp Well-Known Member

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    That sibling could buy the property outright, or you could sell it as a tenanted property - ie subject to the new owner agreeing to accept the sibling as a tenant.