Do you really need a company/trust?

Lee,

In regards to the public liability on your properties, i believe each policy will only cover events occurred on that particular property.

Scenario 1 Eg tenant in house 1 trips over steps and goes through a plate glass window which makes a hell of a mess of tenant. In this instance you may be covered by that policy. However if someone else sues you personally (eg slander, misappropriating funds, killing the neighbours movie star dog with stones when you were mowing whatever) then your assets on up for grabs and it depends on how good your solicitor is compared to theirs. Despite have these public liability policies – they are not going to cover you if an incident occurs that has nothing to do with your properties. A trust may offer some protection here.

Scenario 2 Consider this. Hubby is laid off and can’t find new job…not enough income coming in, negatively geared properties are eating into your savings. You decide to sell one of the Neg geared properties as value has gone up lots and you’ve had it for years. You sell, make 200,000 capital gain. But hang on, property is in hubby’s name so he is liable for the tax – up to 48500 of gain is lost to tax man. Outcome still ok – as you have $151500 left over…. But if you use a trust, the trust can spread this capital gain to beneficiaries to minimise the tax. so you distribute to your children, aunties, uncles, yourself, hubby, private company. This way you will have a more control over your tax situation than if held personally. Heck it is even possible to spread this capital gain around so no tax is payable. The only control you have in paying tax if held personally is when you sell it (in next financial year or a year with little income earnt by the hubby) – but if you need money fast, then this timing issue cant be controlled.

Different strokes for different folks. At the very least you should discuss it with qualified individuals.

As for finding these qualified individuals – try asking these questions

“I would like some advice in using company or trusts to hold our investments in? Do you Mr/Mrs Accountant/Solicitor own investments? Do you use a trust/company to invest through? why/why not? If they don’t use one – find one who does and discuss it with them. Best to talk to someone who practices what they preach. Usually your first interview is a freebie so you may need to interview a few professionals. Try to see some professionals who invest in their own name and in other structures. Get a balance and not a skewed view.

OSS

Insurance will NOT cover you if you are criminally negligent.

Imagine this: You are involved in a motor vehicle collison and another party ‘alleges’ injury and sues you. It is found that the tyres on your car are unroadworthy.

In this case your insurance company will run a mile and tell you that you’re on your own. In this case it doesn’t necessarily matter who was at fault in the accident.

Those investment properties in your own name are up for grabs.

Cheers,
Greg

Visited the A/c the other week for less than 2 1/2 k he set up a Family Trust with a Pty Ltd Co.

Can you tell me what you can do under this?

Cheers

Just remember that a trust deed is not the same as a good trust deed. Sometimes a more expensive price can be better in the long run.
A good trust lawyer can break into most trusts in about 5 minutes. I have seen it done.
A family trust can also restrict you in a lot of ways. Consider a discretionary trust and if the person you deal with doesn’t know the difference then find someone else.