I’m a starting out property investor curious about the perks of using a family trust to protect my assets.
I’m wondering how i go about setting up a family trust?
Which one (unitised, discresionary etc) is most appropriate for keeping my residential real estate in, bearing in mind that i’m the trustee with beneficiaries at my discresion?
Is there any limits on how many properties i can keep in it?
Can i use a company structure to own ie. 5 houses and then have my family trust own several companies, for multiple investments (20+)?
What are the benefitsIt’s good to have Hybrid trust. now you have to decide if you want company as trustee or your self as a individual trustee. it’s hard to say without knowing your full situation I think you should talk to accountant for this. but Keep Hybrid trust in mind. Get Book “TRUST MAGIC” to learn more about trust.
Cheers
PropertyGuRu [sultan]
Mortgage Consultant
[email protected]
MSN ID: amitash, Yahoo Id: bornguruNZ loan pre approval from OZ in 48 hours,Low Doc from 6.85%,Investment loan 95%+
What are the benefits of a Hybrid Trust?
I don’t want to buy the book!
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdOne of the benefite is you can do negative gearing while enjoying all the benefits of TRUST. For every thing you need to speak to accountant and that accountant who knows the benefits of HYBRID trust.
Cheers
PropertyGuRu [sultan]
Mortgage Consultant
[email protected]
MSN ID: amitash, Yahoo Id: bornguruNZ loan pre approval from OZ in 48 hours,Low Doc from 6.85%,Investment loan 95%+
you can setup a trust online in 5 mins for $137! But you had better understand them before you do that.
You can have an unlimited number of assets in a trust, but for protection reasons, you would be better setting up new ones every now and again. Usually the trustee is a company, and you control the company – in case the trustee is sued. But a trust can just hold shares in a company too.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
is there really a benefit in a trust holding shares in a company that owns the asset?
I would have thought that would be a pointless excercise if you are trying to protect the assets.
Byronent
Adelaide SAIt wouldn’t normally be a good idea to have a company own the assets as you’d lose the 50% CGT discount.
GP
In terms of asset protection I very much agree with Terryw – one seminar I attended even went as far as advising one property per trust.
While this creates more paperwork it also provides the greatest amount of protection. Effectively if the trust is sued the most the litigant can get out of the trust is the net value of the trust ie. the value of the property less any mortgage.
If you are about this for asset protection reasons you may also want to seek advice about a trust to hold all your personal assets. Most people believe that if they use a company as trustee their personal assets are protected. However, if you are a director of the corporate trustee and the trust and trustee (the company) can’t pay out the trust’s debts then you become personally liable (s197 Corporations Act 2001).
Ajent,
Doesn’t that clause state you may become liable should a number of things be presumed or in fact you were aware or deemed to be aware of certain actions.
I find it very vague, and as a director myself, I am very comfortable with anyone trying to sue. The action of litigation is one thing, actually succeeding is another.
Provided you don’t commit a crime, act fraudulently or intentionally or knowingly or even deemed to be insolvent then most of the corporations act protects you.
Where you are normally caught out is the personal guarantees some directors give out on top of the directors guarantees.
Anyway, that is my 2cents worth.
Byronent
Adelaide SAByronent,
The section is not about insolvent trading etc it is specifically about making directors liable for debts and other obligations incurred by the company as a trustee. The section reads:“A person who is a director of a corporation when it incurs a liability while acting, or purporting to act, as trustee, is liable to discharge the whole or a part of the liability if the corporation:
a) has not, and cannot, discharge the liability or that part of it; and
b)is not entitled to be fully indemnified against the liability out of trust assets.
This is so even if the trust does not have enough assets to indemnify the trustee. The person is liable both individually and jointly with the corporation any anyone else who is liable under this subsection.”
I don’t work directly in this area but have read some of the cases & for the relatively small expense of locking my assets up in another entity I believe it is well worth while – very cheap insurance.
I am all for security and protection but I do believe that passage you wrote does have exception clauses.
I am not arguing with you, but as a trustee sure you may have problems, but as a trustee corporation that you are director of, don’t you quite a lot of protection?
Byronent
Adelaide SAOur accountant, who has previously recommended a Discretionary trust to us, now says that it is pointless as the law has changed and the Trustee is liable anyway. Cheers
If you live in Melbourne, Dale Gatherum-Goss is someone I would highly recommend. His first consultation is free and to me he comes across as a great guy as well.
Cheers,
Gatsby.The Gatherum-Goss staff can work with people all over the country. I’ve recently been interviewing a few accountants who have been suggested to me, and they shone out miles from the rest.
There’s no point trying to learn everything about trusts, hybrid trusts and companies when for a nominal fee you can have the experts (who write books on Trusts) do it all for you – and you know it’s done right.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
