The practicals of creating a DTT

Discussion in 'Wills & Estate Planning' started by Aspirant, 31st Oct, 2020.

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  1. Aspirant

    Aspirant Member

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    If I want to leave my estate in a DTT, do I set up a trust and annex to my will? Or do I leave the details of the proposed trust to the executor?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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  3. Aspirant

    Aspirant Member

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    Thanks for your input. How secure is a DTT? Can someone pretend to be the trustee, then sell your properties to another party? How is it possible to verify who the current trustee is?
     
  4. Trainee

    Trainee Well-Known Member

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    May want to read about trusts in general first.

    Choice of trustee and executor are probably more important than being concerned about fraud by unrelated parties.
     
    Last edited: 31st Oct, 2020
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    The trustee would become the legal owner of any property so it is the same as any other property.
    But the trustee holds it for the benefit of others, and not themselves (unless also a beneficiary). So they could breach their duties and transfer the property to others at under market value, steal money etc. You need to have a trustee you can trust.

    Seeing what name the title is in is an indication of who the trustee is. Otherwise it will depend on the chain of documents - will, any amendments etc.
     
  6. Aspirant

    Aspirant Member

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    Changes
    It will be an administrative challenge to keep track of change of trustees. 40 years into the future, who among the beneficiaries will be able and willing to take charge of the administration. If I were to use a DTT, I would use a company trustee with conditions that only beneficiaries can become shareholders or directors of the trustee company. After thinking long and hard, I am still unsure if I should use the DTT.
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Get some legal advice.

    One option is one testamentary trust for each beneficiary with that trust controlled by that beneficiary. They will main control. You can appoint the next appointor, via your will, or leave it up to the beneficiary to nominate their successor appointor.

    With all the benefits I am unsure why someone would not want to set up a TDT in their will.
     
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  8. Trainee

    Trainee Well-Known Member

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    If there were a few million dollars in the trust? Beneficiaries would be willing to pay a professional to administer, if needed.

    And if the beneficiary is legally unable because they are incapacitated, a minor, a bankrupt, or not an Australian resident?

    What do you think the major benefit of a DTT is? That s102AG income is pretty sweet.
     
  9. Aspirant

    Aspirant Member

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    My thinking is different.
    My thinking is different. First set it up right. Instal insiders as trustees. The less outsiders know about it, the better it will be. consult experts when necessary. I am thinking aloud. Your opinion is appreciated.
     
  10. Trainee

    Trainee Well-Known Member

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    My approach is to allow for as many possibilities as I can. I think of what can happen between when the will is made and 80 years after death (assuming the TT vests after 80 years).

    What if I die when my heirs are still minors? What if they are adults but unable to manage money? If they themselves die early, become bankrupt, etc? Or very simply they move to another country?

    imho unqualified insiders are riskier than qualified outsiders. Not all my heirs are going to be fund managers or lawyers.
     
    Last edited: 2nd Nov, 2020
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  11. JasonC

    JasonC Well-Known Member

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    Is it possible to create TDT’s if it is not specified in the will? Eg. The will leaves the assets (say >$3m) to be split evenly between two adults but no mention of a TDT.

    The two adults are avid readers of this forum and know there any many advantages to a TDT. Can they arbitrarily decide to have the inheritance setup in a two TDT’s (one controlled by each) rather than receiving it directly?

    Regards,

    Jason
     
  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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  13. Aspirant

    Aspirant Member

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    Thank you. These factors went out of sight for a while but are relevant to me. That’s the advantage of a forum.
     
  14. JohnPropChat

    JohnPropChat Well-Known Member

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    This will retain the taxation benefits of TDTs but will weaken asset protection measures and social security aspects?
     
  15. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It won't change the social security aspect but might weaken asset protection on family law, but not on bankruptcy generally
     
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