To Trust or not to Trust

I have many doubts about buying my properties up in a trust again. My accountant recomended it to me years ago. Now years down the track I have realised some bad things that go with it.

NUMBER 1 thing is damn land tax. Just got a bill yesterday for $8,400 and that's per year. Properties in a trust get NO Threshold allowance. If I had these properties in a Company structure or in my own name the Land Tax bill would be $2,445 per year.  
You might think this is not that much difference, BUT after paying my land tax bill for the past 10 years and my yearly accountant bill to do my Trusts tax returns has costs me a small fortune. I know people say it's all for protection against losing your assests, that's why I did it, to protect myself against ex-wives and ex-girlfriends, but in the end they got a share of it anyway. Just make no sense to me.

Interesting reading.  I'm in your situation JacM; I'm still trying to decide which way to go…

You shouldn't get getting this sort of advice from accountants Jack. Its legal advice.

There are a number of reasons why a person could be sued. Many are business related or even investment related. eg say you bought some houses and then you set up a trust and bought a few more. Things go bad, you lose you job etc and the bank starts recovery action, but there is a short fall. They get court orders to seize your personal property – your stamp collection, BMW and plasma TV. But it is not enough to satisfy the judgment so they bankrupt you. Generally the property in the discretionary trust is pretty safe.

There is a case, where a Landlord sued by tenant who tripped on carpet injuring her back
Muir v Hume  [2003] QSC 191
http://archive.sclqld.org.au/qjudgment/2003/QSC03-191.pdf

Or Golfer sued because of ball strike
Ollier v Magnetic Island Country Club Incorporated & Shanahan [2003]. QSC 263
http://archive.sclqld.org.au/qjudgment/2003/QSC03-263.pdf

Appeal of Ollier v Magnetic Island Country Club Incorporated & Shanahan [2003]. QSC 263
Ollier v Magnetic Island Country Club Inc & Anor [2004] QCA 137 (30 April 2004)
http://www.austlii.edu.au/au/cases/qld/QCA/2004/137.html

Have a read of the judgment amounts there.

Hi All

One interesting point about Land Tax is that, as a Vendor Financier, my Land Tax bill disappears as soon as I on sell a property with a particular type of Vendor Finance.  Even though our name may stay on the title for 30 years.  Great things, Land Tax variations

Cheers,  Paul

JAck

INsurance is good, but it won't cover every thing. Imagine if there was a repair that you knew about but didn't get fixed despite repeated warnings from the tenant.

Well, if you think of it from the other side, if someone causes you can injury then you should be compensated for that injury.

If you want to be scared, read this court judgment Muir v Hume  [2003] QSC 191
http://archive.sclqld.org.au/qjudgment/2003/QSC03-191.pdf

The safest structure is a discretionary trust with a corporate trustee. There is a chance that a trustee could be used and be liable, in some cases, so one property per trust is the safest.

But you need to weigh up the risk with the cost too. Having one property per trust is going to cost you a fortune and is going to be a nightmare to manage if you have 10 or 20+. Eg each company will require ASIC company statements every year as well as a tax return. Each trust will also require a tax return as will each individual.