Asset Protection for Residence and investment - which trust?

Hi i will be seeing a accountant soon and discuss this with my lawyer but wanted to get a better background before discussing it with them.

Currently my father has a house that is his residence and a investment property that is under mortgage (3/4 is paid off). He has children and ex wife from his last marriage that he doesnt want property to go to because he has allready given them money and assets. But is worried that if he passes away they will try to claim his remaining assets eventhough he is explicitly leaving them to his current children. From what i have read eventhough you have a 'will' and choose not to give assets to certain people in the family they can still sue and claim a portion.

Anyway i was considering him to set up a trust. But am unsure whether it should be a unit or discretionary trust. And if he would be able to still claim his house as his residence and not pay CGT or Stamp duty on them as he will be the unit holder of it. And same with moving his investment and loan into the trust.

So my main question is if his assets will be protected from others and be safe with the people outlined in the trust?
And can he keep his house as residence, and pass it onto myself or brother as a residence aswell? perhaps dicretionary will trust?
With his investment property can it get transfered into trust eventhough it has a loan attached? (unit trust)
Can the above be passed onto others in trust without interfence from people outside of trust?

thank you for your help and time.

Kind regards,
Warran

Hi

Transferrng current properties into a trust will have stamp duty and potential CGT issues so he should get some advise and possible speak to a legal advisor before doing so as to what his other options are regarding a will etc..

You really shouldnt have your PPOR in a trust unless you plan on using this as in investment propery in the next few years.  You also have to be careful about paying the trust market value of rent and you need to be buying other investments within that trust so that it remains a trust by definition.

I think his best bet if he wants to choose where certain assets go is to speak to a lawyer that specialises in these type cases.

Regards,

Alysha

Yes, family members can still make a claim on his assets, despite what is in his will, if they feel hard done by. Trust assets do not form part of your estate when you die, and so can't be willed. But transferring them to a trust now will mean they are being sold and so you will have stamp duty, legals, and CGT on the investment. PPOR in a trust will also not receive the CGT exempt status, plus there will be land tax issues. He would need to get the loan changed too and this would entail reapplying and proving income etc.

There may be other ways to protect the assets like you or another relative taking a mortgage over them, or second mortgage so that if they are attacked, there will be no equity left. Maybe a trust could do this too.

better talk to a good lawyer who specialises in succession issues.

Terryw
Discover Home Loans
Terry@discoverhomeloans.com.au
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