Hello
I'm in Victoria and have two queries. I was wondering if anyone could give me any ideas or background before I go ask my accountant.
I've got a company that owns a property and I was looking to transfer the shares into a discretionary trust. Is there any tax or stamp duty implications if I give the shares or sell them cheaply to the trust?
Some day in the near future I stand to inherit a property, which means it will be in my name. I was considering protecting it by borrowing heavily against it and letting the bank cross collateralise and use it for security for everything I control. Are there any implications for giving the lump sum borrowed to a trust (for safe keeping).
Thanking you in anticipation.
Graeme
1. Yes both stamp duty and tax on the transfer of shares – assessed on market rates too.
2. Yes. Transactions done with the intent to defeat creditors can be undone – no time limit. If you were to go bankrupt then the transaction could also be undone for up to 5 years if there were no intentions to defeat creditors.
If you borrow on it and gift it then the interest on the loan will not be deductible too.Why not look at setting up a testamentary trust from the beginning. These may be possible even if the will did not allow it. This would be the safest way and the most tax effective too.
Terryw | 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
Thanks Terry
Most appreciated
We can protect the property in the company OK, but was mainly interetsed in diverting the business revenue into a protected structure. the business could easily be transferred to a trust which can allocate the profits so that should be OK. It's a good time to do it now becuase the balance sheet is not that impressive at the moment, but future profits will be substantial and have to go somewhere.
I'm not out to defeat creditors, just have less vulnerable in case some skumbag wants to sue me.
It is impossible to change the will. Maybe I haven't been thinking simply enough. I'll let one of my protected structures use the property as collateral and the funds go into the protected structure fully tax deductable. Then I'll let the bank add the property as security for every other loan in my portfolio. I'll own the property, but make it cost twice what it's worth to discharge the mortgages:-)
Graeme
No need to change the will, they can be set up after death.
see http://www.taxlawyers.com.au/manuals/PostDeathTrusts.htmTerryw | 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
Hi Terry
Please correct me if I'm wrong, but upon reading about post testamentary trusts they are useful for distributing income but the capital in the trust is allocated specifically as per government rules. The asset protection for a discretionary trust comes from the fact that no one owns anything or has any entitlement. This wouldn't work with a post testamentary Trust???
Graeme
Hi Graeme
I don't know too much about the PTTs. I beleive the beneficiaries are restricted to those that would have received something if the person died without a will and the capital of the trust to eventually pass to these people when it vests – in 80 years maybe.
They are not as good as a testamentary trust set up before death, but still may be worth considering.
Terryw | 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
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