Running costs of trust?

Be very careful. For $137 I would think that what you are purchasing is a discretionary trust. If you want to obtain the benefits of negative gearing, ability to refinance and convert non deductible debt to deductible debt, ability to transfer property to another trust without incurring stamp duty, transfer the property to your super fund at a later stage, etc. you will need a unit trust that holds the property with all the units issued to a discretionary hybrid trust and all the income units in that hybrid trust being issued as appropriate. Depending on whether you have a corporate trustee or not (remember this structure requires two trustees) then the cost will be between $2,000 – $3,500. You might be thinking gee that is a lot of money. But remember that purchasing an investment property through a trust and later purchasing a private holiday home, boat, holiday, etc (usually non deductible but with the above structure it can become deductible) you can save over $100K.

I respect TerryW and he is probably one of the most helpful people on this site but I would be careful referring people to cleardocs or lawcentral as they may act on your advice, setup a discretionary trust, purchase the property in the trust and then wonder why all the losses are trapped for years to come. I like you and don’t want to see a potential law act against you mate.

Do not try to do this on your own collie. Leave it to the experts. You might save money now trying to do it yourself but you will in all likelihood get it wrong and you have wasted your money. I have seen many other accountants get it wrong and they are meant to know this stuff.

The fee for ongoing work would depend on the number of properties, etc but if it was just one property in the trust we charge our clients around $1,000 per annum to prepare the financial statements, complete the tax returns, prepare appropriate resolutions, etc. Not sure what others are charging but im sure others can give an indication as well.

Please seek professional advice.

Terry,

I agree the information available on lawcentral in particular is fantastic. Sorry if it came across that you shouldnt refer people to these sites..lol..didnt intend that. I think it is great that you are giving people the power to increase their knowledge.

I just know that LawCentral and ClearDocs does not allow you to establish a Hybrid Trust online and some people may think that they can purchase a discretionary trust and purchase the property in that trust and then negative gear. As you know this is not the case and I know you have warned people about this before.

Just wanted to make sure Collie didnt waste $137 for no reason.

Keep up the good work Terry.

Thankas again Coastymike for your kind words.

Collie you shoulod probably get a copy of the book “Trust Magic” if you haven’t already. Heaps of good info about trusts, including a bit on Hybrid’s. and it is written in a very easy to udnerstand way.

Terryw
Discover Home Loans
North Sydney
[email protected]

Don’t know what state you are in, but here is my NSW experience:

They might charge you $137 for “the trust”, but check whether that includes the stamp duty to register the trust deed with the state govt. In NSW, my last trust (in 2000) cost $200 to register.
Really you are just paying them to provide you the text of the trust deed (which they will have on a computer anyway). See if you can get a softcopy of it for use when (and if) you create additional trust(s) in the future.

I have a corporate trustee.
The company is ~AUD800 to ASIC to register and $212 a year.
Simple to register one.
More expensive to register the company if you don’t do it yourself.

I do the trust bookkeeping/accounting/taxes myself.
My trust accounts need not be audited.

So ongoing cost, with a corporate trustee, is $212.

Contact me if you want to know more.

There is no stamp duty payable for trusts settled in QLD. I am not sure how it works, but maybe all you need is a settlor that is living in QLD?

It would be possible to just copy a trust deed, but keep in mind these are copyright, and they are updated and improved all the time. Also if there is a mistake in the deed and you have used a copy, who could you sue? It is probably not worth it for the small savings.

Terryw
Discover Home Loans
North Sydney
[email protected]

Cata

I’ve been advised never to use a cheque for the settled sum. I think it had something to do with causing problems if the account was ever closed. Have you heard of that? I staple $10 notes to my trust deeds.

Terryw
Discover Home Loans
North Sydney
[email protected]

Cata

I will try to find out more. I suppose you could become unstuck here is it turned out the $10 note was manufactured well after the trust deed stamped (eg from serial number).

Terryw
Discover Home Loans
North Sydney
[email protected]

Terryw
Settling a trust is not esential within 28 days but it is something I do to eliminate any future possible questions. Like the cheque, it’s to ensure you can have some proof of the trust being settled(no one I know has a problem with keeping $10 only in the a/c). The $10 note can be misplaced or fall off the deed etc and if someone really wants to be picky, stapeling a bill could be seen as damaging government property. Unlikely, I know.
I also deal with accountants and legal people who are possibly the best in the country.

There is many opinions on this subject and mine is one of them. All I can say is the closest someone has come to challenging one of these trusts is asking to view the deed(something they are entitled to do) and then handing the deed back, then droping the case.

Opinions vary on this subject.

CATA
Asset Protection Specialist
[email protected]