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Asset Protection loooong term!!!! IS a trust the way to go?1 2markh3084 [29 Posts]  Goood morning all, I know this has probably been asked before, but I cannot find the thread. Hopefully someone has the answer to this question. The scenario that concerns me is this: What happens if I acquire properties, and pass them onto my children, and then, worst case, my child's relationship fails, what is to stop their now ex partner from taking half? This is supposing they have not signed a pre nup and even if they had, I wouldn't necessarily trust this anyway..... Would purchasing under a discretionary trust prevent this from happening, if only my children and their direct descendants were listed as beneficiaries?? this may seem like a silly question, but potentionally talking about a few million dollars in a few decades? Any thoughts??? Mark miike [110 Posts] There are quite a few threads on this topic, do a search. Or even better, go out and buy Steve's new book, he has a dedicated section on trusts. Alternatively, the best advice you can get is to see a seasoned accountant that has experience with property investing clients. Cheers,  Chiz [71 Posts]  Ask a professional however.... I just read "How to legally reduce your tax" by Tony Melvin & Ed Chan. It is specifically about Australian tax laws and its a 2009 to 2010 edition. Its 80% about Trusts. There are many types and it compares them all. There is a solution to your exact concerns. Good luck. Oh and its written in such a way that it takes a dull subject and makes it actually readable. Excellent book! Chiz markh3084 [29 Posts] Thanks Chiz, I have read another of their books, so will look around for it. Thanks also to Miike, I had done a search and the resulting list of 32 pages of links was too long to wade through. Cheers to all Mark Terryw [11895 Posts]  The Family Law courts have special powers - even discretionary trusts are not completely safe. But they are still the best form of asset protection overall. Possibly look at setting up a testamentary discretionary trust for any existing assets and for future assets there are a number of extra things you can do in for additional protection - best to see a good lawyer. Terryw ryan mclean [477 Posts]  I have a friend who is going through this situation (as the son in law) and truthfully it frustrates me. Your son/daughter has chosen their spouse for (hopefully) good reasons, and one of the important things to them will be you placing your trust in that spouse. When you get married you decide what's mine is yours and what's yours in mine. By giving a gift that is limited to only your child and not his/her spouse you are indirectly causing a violation in their decision to each other. They are now living as one unit, one family unit, and I believe it is important for parents to recognize that. At the end of the day I believe it is more important for your child to know that you approve of their spouse in every way (no matter what happens, even if they eventually get divorced) than trying to protect whatever gift you may be giving and nullifying any trust you place in your child to choose the right spouse. This is obviously something I feel strongly about. I know I wouldn't be where I was today if my wife's parents didn't trust me to take complete care of my wife. If they were to offer a gift, but it contained the limits you want to put on yours, I would see that as a personal offense and would refuse it. I don't expect you to take this advice, or even agree with me. I understand the need to protect your finances from poachers if it is a lot (which at the moment I don't know if it is...A few million dollars in a few decades will be chump change because of inflation. Think about the money....yes....but think more about the relationship with your new child in law and what that is worth. I would trust my child enough to give the gift to BOTH of them. Ryan McLean I-dream-houses [24 Posts] Look up testamentary trusts - they are like a living will. Hope this helps. If you can DREAM it, you can do it! Chiz [71 Posts] Also look into setting up a Ltd company. Company is set up as trustee of the trust. The trust buys your investments. You (and others in your family) are the beneficiaries of the trust. You are also the company director (along with wife/partner). If you die there is no change to anything (wife/partner are still beneficiaries). The company is controlled by wife and the so she indirect controls the trust and therefore who gets the profits generated in the trust. More details in the book I referenced above. Chiz number 8 [331 Posts] I like the acronym K.I.S.S. This is very simple, as "I-dream-houses" has stated set up a testamentary trust ( a lawyer will do this). It will simply place your assets into a trust on your passing. The beneficiaries are your family. It lacks complexity and low cost ( approximately $100 on top of your will -Total about $300). I sometimes have trouble understanding why accountants, planners etc require complex arrangements when a simple solutions are required, actually I do know why............. Chiz [71 Posts] As I said, I'm not an accountant or lawyer (just reading a book written by accountants - see book reference earlier) The only thing about a testamentary trust is that it "quaranteen" any losses you make (means that if your properties make any losses you can't claim them until they make a profit - so if your strategy includes negative gearing, you can't claim tax on the loss until it becomes CF+). According the the table on p112, this also applies to Family, Discretionary, Testamentary, Capital Vested, Child Maintenance and Self Managed Super fund trusts. Does NOT apply to Unit, Hybrid, Bare and Property Investor trusts (but these have other pros and cons). Great book - read it and find out (shame I'm not on commission!) and then check with someone qualified !! Chiz Terryw [11895 Posts] Chiz Units and hybrids technically also quarantine losses. ie losses from a trust cannot be used to offset personal income (A trust is a different entity for tax). But a way around this is where an individual borrows money to buy the units in the trust and the individual claims the interest on this loan. Terryw Chiz [71 Posts] Ah ha. I'm still learning (as expected). Don't want to hijack this thread but do you know anything about the Property Investment Trust? (is there another thread on this subject) Chiz I-dream-houses [24 Posts] You may be able to buy properties under your name if you'd like to take advantage of the negative gearing benefits of your IP now and then set up a testamentary trusts so that the assets are protected upon your death. If you can DREAM it, you can do it! Terryw [11895 Posts] Chiz wrote:
Ah ha. I'm still learning (as expected). Don't want to hijack this thread but do you know anything about the Property Investment Trust? (is there another thread on this subject) Lots have changed since that book was written! There are a few old threads here about the PIT and the author of the book posted too. Mr Chan - forget his first name. Terryw number 8 [331 Posts] Sorry, and who are you helping?????? I can answer that , that will be yourself....... Assist Business... [8 Posts] Hi Mark, A trust is definitely the way to go but it is important that the trust deed be worded in a specific way so that the assets held within the trust are exclusively for the benefit of the family tree line. Some people refer to this type of trust as a "bloodline trust" as it keeps the assets within the bloodline of the family. Based on my experience with clients, divorces can get very nasty and this should definitely be something you should look into. Effectively the "bloodline" trust is in many ways similar to a normal discretionery trust but it does contain a few extra clauses which ensures that the assets will always be controlled by members of your immediate family. A good lawyer is essential in setting this up (as apposed to an accountant) as a trust deed is essentially a legal document which requires their expert guidance. Depending on where you are based I could recommend a few good solicitors in this area. Regards Robert King Skype robert.king2204 Terryw [11895 Posts] number 8 wrote:
Who is this directed to? Terryw number 8 [331 Posts] Terryw, There was a large advertisement after your comment, it was plastered on most topics earlier today. Selling cash flow properties and had nothing to do with any questions being asked.... hence the comment Sorry to offend, I will have to write this over about six discussion topics if he removed them all..... Terryw [11895 Posts] number8 Didn't think it was directed at me so no offence taken. Just couldn't see which post you were referring to. Terryw Investors Zorba [58 Posts]  Terryw wrote:
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