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Its a mistake to think a ‘trust’ equates to asset protection.
It comes down to several things such as
a) terms of the trust deed
b) structure of the trustee
c) funding the trust
d) documenting things
As an example I have seen many people that might set up a trust, usually with an accountant, who have never read the deed. They paid the deposit on the property and then make the loan repayment on the trust’s loan.
If they went bankrupt it is easy to argue the trust does not exist, or the trustee holds the property on a resulting trust for them. So no asset protection at all.
To check, if the solicitor is holds a NSW practicing certificate you can search here https://www.lawsociety.com.au/for-the-public/find-a-lawyer
Search for the solicitor or the firm name.
There are similar ones for other states.
Lawyers must renew every year.
Sometimes non-legal firms provide documents which have been drafted by a lawyer. Unless that firm itself holds professional indemnity insurance you would not be covered if things went wrong. You could not sue the lawyer either because you would only have a contract with the intermediary firm.
My company is an incorporated legal practice and covered for legal advice. I specialise in estate planning, asset protection and structuring.
Yes I agree. But I suggest you get the deed reviewed by an independent lawyer before finalizing. Also make sure you are contracting with an incorporated legal practice so you are covered by the lawyers professional indemnity insurance. If you are supplied by a company that isn’t a law firm you won’t be covered.
I have reviewed a few of these trusts, and associated ‘asset protection’ strategies.
my advice is for you to seek specific legal advice when setting up a trust – from a solicitor with a practicing certificate.
1. comprehensive legal advice is needed.
2. you or the entity would probably want to borrow it if possible. no relevant information given. have you a paid off main residence? Excess cash you can use etc.
3. heaps – death, family law, incapacity, bankruptcy, land tax, stamp duty, CGT/Revenue, serviceability, income tax, asset protection, estate planning, trust law, corporations act etc etc.
Changing to IO will result in a reassessment.
Have you spoken to the lender to see if they will allow the substitution of security to a term deposit?
take the profits and apply for a new loan is the best way.
If you need to keep the loan open see if the lender will allow it firstly. Your only choice would be a term deposit at the prevailing interest rate. The only way to mitigate this is to keep the period between sale settlement and purchase settlement to a minimum.
That option is available, but the interest could not be deductible because it relates to a use which is non-income producing.
There is no such thing as a standard trust. There are multiple ways that the deed can be worded and these will have long term affects.
Don’t see an accountant as this is legal work, see a lawyer and get an idea, with their help on how to structure the trust and word the deed.
Answer is not correct – generally. When someone behind a trust dies the trust will keep going without the assets passing. Trusts can last up to 80 years and it would only be when they vest that the assets come out, and who they go to will depend on the wording of the deed. It will probably be one of your grandkids running it by this time.
I am a trust lawyer – what is straight forward about trusts?
Here is one question to test you – what happens with the assets in a trust when you die?
Best to seek legal advice.
Trusts are not legal entities so cannot borrow. It is the trustee that borrows, in their capacity as trustee.
Most banks will lend at normal rates and terms to trustees, whether they are individuals or companies. Residential loans in most cases.
If a company all the directors will need to give a personal guarantee.
If a trustee is borrowing the lender will need to review the trust deed and make sure the trustee has the power to borrow, to mortgage trust property and to be indemnified out of the trust assets.
Trustees of discretionary trusts and unit trusts are able to borrow, but not bare trusts – or no lender would lend to a bare trustee if they know they are acting as trustee.
I don’t know as I am not a property lawyer, but would think this would depend on the title and any rights such as easements..
i am no property lawyer, but there can be restriction covered by covenants on title and even laws which will restrict what can be done. Strata have the additional strata laws to contend with.
He should be seeking legal advice – from a lawyer, not a conveyancer.
Nope for all of the above.
It probably means it is from a subdivision after the original street numbers were issued. Number 1 was split into 2 hence 1A and 1.
I am not taking on new law clients atm as getting too many.
You can read the legislation at s 55 of the Duties Act NSW and surrounding sections:
Hi I am a joint tenant in a PPOR with my parents. About 5 years ago I transferred 33.33% of the title into my name in order to build a new house. I paid the required stamp duty at the time. Since then I have married and my wife and I have 3 other investment properties. Getting finance is such a hassle because in order to borrow funds, my parents need to be joint borrowers when I wish to draw equity out of our house (we all live in the house together BTW). I now want to transfer the remaining 66.66% into my name but obviously the property’s value has almost doubled since rebuilding from the previous old home but is there a way I can reduce or eliminate the stamp duty? There is a small amount of equity used but does it make a difference to the situation if there is a mortgage over the property or if it is owned 100% outright which I hope to be holding the title certificate in my hand early next year? Thanks
The only way to avoid duty is to argue that the parents hold their share of the property on trust for you. It would be a resulting trust that arises because of the circumstances. We have helped a couple of people transfer title without duty – or nominal duty in situations like this in NSW.
If having the property mortgaged won’t necessarily affect the duty aspects, but practically the mortgage will need to be discharged when title changes hands – which would mean a new loan application if it won’t be paid out.
Best to seek legal advice.