Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of KDTKDT
    Member
    @kdt
    Join Date: 2004
    Post Count: 30

    Hi All
    I hope i’m posting in the right spot…apologies if not..This will be our first IP of many …..

    We had a meeting with our mortgage broker today about unlocking some equity in our own home. Numbers crunched and the broker unlocked about 90k.
    He suggested to us that a family trust (discretionary? I think) would be a good idea so as to help protect assets.(our home). He suggested that it would be a good idea to buy in the trusts name rather than our own as it could (would ?) be expensive to transfer to a trust later down the track.
    We had spoken to our accountant about trusts about 2 weeks ago and he suggested buying some properties first and then we’d look at trusts.

    Comments, suggestions, opinions on the above welcomed. [exhappy]

    Regards
    Phil and Kate

    We embarked on this little journey about 2 weeks ago and we’re a bit confused….[confused2]and next friday we sign the documents to unlock the equity in our home…..scary…[worried]

    I will make it….regardless

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913

    “We had spoken to our accountant about trusts about 2 weeks ago and he suggested buying some properties first and then we’d look at trusts.”

    Hi Phill & Kate,
    Alarm bells should be ringing,
    Did your accountant mention the cost involved in transferring property into a Trust at a later stage?

    My understanding is, if your owner occupied residence is in your name it will not be protected by the Trust, asset protection may apply to the investments in the trust, but in this case your PPR is outside the Trust,
    Trusts are generally fine if you intend to accumulate a large property portfolio, but if your intention is to acquire 1 or 2 properties then you may want to give it some further consideration,

    I’m concerned that you may have been given some pretty doggy advice, please seek competent professional advice before you sign anything,
    Cheers, and good luck.

    Regards
    Steven
    Mortgage Broker

    info@mobilemortgagemarket.com.au
    http://www.mobilemortgagemarket.com.au
    Ph:0402483216
    Ph:1800 820 500
    VICTORIA

    PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.

    Profile photo of KDTKDT
    Member
    @kdt
    Join Date: 2004
    Post Count: 30

    Hi Steven
    Thanks for the reply. To further discussion, our mortgage broker did say today that our PPR wouldn’t fall inside the trust but the idea of the trust was to seperate our PPR from our IP’s. It is my intention to build a reasonable sized portfolio, so he suggested setting up the trust from the outset as transfer would be high further down the track…..

    Regards
    Phil and Kate

    I will make it….regardless

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913

    Hi Phil and Kate,
    Your Mortgage Broker is correct regarding setting up the Trust First.
    On another point, ensure the $90K investment loan is kept separate from your PPR loan.Cheers.

    Regards
    Steven
    Mortgage Broker

    info@mobilemortgagemarket.com.au
    http://www.mobilemortgagemarket.com.au
    Ph:0402483216
    Ph:1800 820 500
    VICTORIA

    PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,058

    Many accountants have little knowledge of trusts and do not recommend them. Then again, many people have good intentions of buying many properties, but end up only getting one and then move onto something different. So I think your accountant may be suggesting you buy one or two and see how you go, if you still think you will buy more, then set up a trust at that stage for future properties.

    Trusts can be cheap to run, and setup, so you might as well get it right from the beginning. Setup a trust, get a LOC on your PPOR, draw up a loan agreement and lend money to your trust which will then use this as deposits and borrow the rest.

    Terryw
    Discover Home Loans
    North Sydney
    terry@discoverhomeloans.com.au

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225
    Originally posted by elika7264:
    Why not purchase a copy of Dale Gatherum-Goss’s book “Trust Magic”. That might answer a number of questions. The book can be purchased via his web site. Regards, Helen

    Hi Phil and Kate

    Ditto on Helen’s advice re buying Dale G-G’s “Trust Magic”. There are a few books out there on trusts, ALL of them totally mind boggling EXCEPT Dale’s books. I paid a discounted $168 for both his books (Trust Magic and Tax Battles), and they both have pride of place on my PI bookshelves, alongside Steve’s Wrap Pack and (soon) Rick Otten’s Wrap Pack.

    I currently have 16 +CF properties (still growing), and am just Joint Venturing into our first 32 block land subdivision.

    If I had my chance to start from scratch again, my wife and I would JOINTLY:
    1. Stop pinching pennies and set aside around $5000 – $10,000 for our self education RIGHT AT THE OUTSET (ie., where you both are now).

    2. I strongly advise BOTH of you to go to Rick Otten’s http://www.webuyhouses.com. Click on EVERY link, download all his raves, read them exhaustively and get yourself off to one of his “Boot Camps” asap (Rick’s an aussie, despite the Boot Camp jargon). He’s awesome (and in case you were wondering, I have no connection with either Steve or Rick except as one of their many highly satisfied clients).

    3. AFTER attending the Boot Camp, value your relationship further by jointly WRITING DOWN your Goal Statement (see Steve’s book, and pay $695 to buy Steve’s Wrap Pack: 3 months ago it cost $2,195: BARGAIN!). My JV partner and I are going through this Goal Setting exercise right now. Not many do it, yet ALL the guru’s urge you to do it. If you’re REALLY serious about amassing an awesome portfolio, DO IT!

    4. Do not pass Go, do not collect $200 until you have completely fulfilled Steps 1 – 3 above

    5. Carefully check out the distinction between a Hybrid and Discretionary trusts re which one allows you to offset -CF income as well as +CF income

    6. Check that your accountant (and Mortgage Broker, by the way) is what forumites call “+CF savvy”. Not many are, and it is CRUCIAL you get an accountant + mortgage broker who GENUINELY fits this description. The mortgage broker should also be able to source “full disclosure wrap finance” at the drop of a hat. If your broker can’t do this, or asks dumbly “What do you mean?”, get the hell outta there fast.

    I stress the “togetherness” aspect of both of you going along this exciting journey together. It really helps if you are of one mind, united in your determination. My wife and I, plus our 20 year old son, set aside 3 nights a week to JOINTLY study Steve’s Wrap Pack, listen to the CD’s, and take personal notes. We start with 1/2 an hours private reading time for each chapter, then switch on the CD, and take personal notes.

    Hope this helps
    Greg

    Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225
    Originally posted by Greg F:

    5. Carefully check out the distinction between a Hybrid and Discretionary trusts re which one allows you to offset -CF income as well as +CF income

    Hi again,

    I assume you’ve been exhaustively studying the other trust thread on the forum board now, with the brilliant suggested sites:
    http://www.strategicwealthmanagement.com.au/e2content.asp?Request=Structure.Structure

    http://www.sjq.com.au/sjq/site.cfm

    Happy reading
    Greg

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi KDT,

    Happy to email the index of Trust Magic so you can see for yourself what the book covers.

    Drop me an email with Trust Magic Index as subject (not PM as you cannot attach files) and I’ll send it back by return email.

    Derek
    derekjones1@bigpond.com

    Property Investment Support Available. Ongoing and never stopping. PM welcome.

    Profile photo of CheeChee
    Participant
    @chee
    Join Date: 2003
    Post Count: 8

    Phil & Kate,

    Basically tell your accountant to go on holidays because he needs one.You should set up the structure first, & then go buy IP’s. As for your PPOR, maybe have Joint ownership 99% to 1% and be fully insured inside & out. If you run a business in your own names then change the structure as to seperate yourselves from the house.Go take a quick look at the Chris Batten.com.au website with some information.If you want to do it right the first time, then go see Chris & don’t sign anything until you have the right structure to suit your needs for today and the future. Your the client afterall. It can be extremely costly down the track(I guess thats why your broker & accountant gave you advice not in your best interests). People get into trouble when they listen to people who don’t know what there talking about & that includes your accountant & mortgage broker who should have referred you on to a specialist.

    Regards

    CHEE

    Profile photo of TwilightTwilight
    Member
    @twilight
    Join Date: 2003
    Post Count: 22

    Hi Phill, Kate & others,
    To take the type of trust one stage further, we have just set up a hybrid trust, by the accountant. But we are coming up against barriers, such as lenders don’t know if they can structure our loan where the loan is in our names (joint) & the property that is to be bought in the Family Trust name. The other problem is the bank account should be in whose name? the trust or joint names? Any help would be most valuable.
    Thanks,
    David

    Profile photo of elika7264elika7264
    Member
    @elika7264
    Join Date: 2003
    Post Count: 160

    Hi Phil and Kate,

    log onto the somersoft web site. Do a search on trusts. I guarantee you will find a heap of information — rather mind boggling at times. [blink] But better to have an idea of the questions you need to ask, than go into a transaction blindly.[blush2]

    Regards,
    Helen

    Profile photo of JuliaJulia
    Member
    @julia
    Join Date: 2004
    Post Count: 217

    To All,
    Great discussion. Two things I would like to add:
    1) If the properties in the trust or company are negatively geared they cannot be offset against other income unless that is also earned by the trust or company and not from personal services.

    2) Unless you have a company as trustee of the trust you do not have adequate asset protection.

    Julia Hartman
    julia@bantacs.com.au
    http://www.bantacs.com.au

    Profile photo of JulieEllenJulieEllen
    Participant
    @julieellen
    Join Date: 2004
    Post Count: 15

    We set up a Discretionary trust to hold the property we run our business from. we had a few weeks after signing docs to change the purchasing entity, in this case from my name to that of the company we started to be the trustee. It gives a bit of leeway for set up, at least in Vic. Noy sure about other states. JulieEllen

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