Which trust structure to use?

Discussion in 'Accounting & Tax' started by Mogul, 22nd Jan, 2017.

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  1. Mogul

    Mogul Active Member

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    Hi All,


    I am glad I found this forum. So much good advice on here.

    I would like to open a trust structure but not sure which one - company or family or ?

    Not single, but keep finances separate and want to remain this way.
    I am renting ( no PPOR) in a town that I don' think has capital growth potential.
    I have an IP in QLD - neutrally geared - in my own name.

    I have a job where I could be sued personally which is why I want to put my money into a trust structure and buy another IP ( QLD) in the trust when I have enough saved. I earn $65-70k p/yr.

    I don't have kids and believe that I need to have another beneficiary of the trust, so I was thinking that I would put my surviving parent who is a pensioner in as a beneficiary.

    Does this sound like a good way to structure things?
     
  2. Terry_w

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

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    No.

    It sounds like you should get legal advice.

    It is not simply a matter of deciding the type of trust and then buying a deed. You need to consider the legal implications of several things such as succession of control on incapacity and death, who should play what role, terms of the deed, social security aspects, land tax aspects, stamp duty etc as well as some tax issues.

    Once you have decided to set up a trust then you have to consider the structure of the trustee, the structure of the trust, the funding structure and how the transactions are entered into.

    I have met doctors who thought they had asset proteciton because they 'trust owned the property' - but there was little asset protection because of the way it was all set up and transacted.

    Start off by reading my legal tips on trusts - I've written about 67 of them
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Why would you want to pay for legal advice? Property is wayyyy too expensive to pay for additional services.
     
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  4. Mogul

    Mogul Active Member

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    thank you Terry. Starting to read your many tips now.
     
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  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Tips are that. They make good education so that when you seek advice you can ask informed questions.

    The personal advice step can be shorter and cheaper that way but not skipped.
     
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  6. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    A couple of things to bear in mind regarding trusts -
    • If you buy in a family trust, banks won't use negative gearing in their servicing which can reduce your borrowing capacity significantly.
    • You can structure a unit trust in such a way that the unit holder can claim neg gearing - banks are usually happy to use this but it takes good explaining to the assessors. The pool of lenders is limited.
     
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  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya and welcome aboard :)

    Why do you feel the need for a trust?

    In any case - seek pro advice on the matter. Terry above would be a good start.

    Cheers

    Jamie
     
  8. Mogul

    Mogul Active Member

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    Purely for asset protection.
     
  9. Mogul

    Mogul Active Member

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    So complex :(