All Topics / Legal & Accounting / Asking about Family Trust

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  • Profile photo of GrowGrow
    Member
    @grow
    Join Date: 2010
    Post Count: 5

    Hi there,

    is anyone who read this post knows how to set up a Family Trust ?
    What is the obligation and conditions apply and documentation ?
    How much is the cost ?
    Can a bridging visa holder can set up a Family Trust and start inveting in property?

    Please help let me know !!!

    Or any recommandation who do this legal service from this site ?

    Thank you very much for your guys reply and input.

    GBU
     

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Yes, I know about setting up trusts. It is extremely complex – what do you want to know specifically.

    Just the legal obligations alone could fill up a book – the trust must act in the best interests of the beneficiaries, cannot profit from the trust at the expense of the beneficiaries, must account to the beneficiaries. The beneficaries have the right to inspect the financials of the trust, to be taken into account for distributions and to lodge a caveat over trust property etc etc.

    Cost to set up from $200 to $10,000. Stamp duty is $500+ in nsw, but may be nil in other states.

    A brdiging visa holder can set up a trust, but there may be tax consequences depending on whether the person is a resident for tax purposes.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Dan42Dan42
    Member
    @dan42
    Join Date: 2008
    Post Count: 620
    Terryw wrote:
    Stamp duty is $500+ in nsw, but may be nil in other states.

    Wow, 500 bucks stamp duty!

    There is no stamp duty on trusts in SA.

    Profile photo of TerrywTerryw
    Participant
    @terryw
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    Post Count: 16,190
    Dan42 wrote:
    Terryw wrote:
    Stamp duty is $500+ in nsw, but may be nil in other states.

    Wow, 500 bucks stamp duty!

    There is no stamp duty on trusts in SA.

    And they last forever there! The only state with no law against perpetuities.

    There used to be no stamp duty in QLD too, but I am not sure if that has changed.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of danielfieldsdanielfields
    Member
    @danielfields
    Join Date: 2010
    Post Count: 2

    I'm in a very similar situation to James as an Australian Permanent Resident  (US Citizen) and want to decide best way forward–trust or no trust.  I could personally put 20%+ down on my desired properties but have looked for family/friend investors to quickly reach my goal of occupying the property short-term, but being cashflow positive thereafter.  I have verbal commitments from family (US citizens / US dollars) and a trusted friend (Swedish citizen / Australian dollars) to co-invest.  What are tax and other implications of accepting money from family/friends and buying as an individual as opposed to setting up a trust and buying as a trust?  I am also interested in simple… i.e. since I believe I'd qualify individually for the loan I need, would prefer to deal with bank as an individual, rather than have them check credit of my partners (who are likely principal only contributors).

    Any advice appreciated.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    If your friends are on title then they will be required to go on the loans. So you would have to come to some other sort of arrangement such as a loan from them for the cash injection or have them as beneficiaries of a trust.

    If they are beneficiaries of a trust and then they receive a distribution then this will create tax issues as non residents are generally taxed at 30%+.

    You also need to be careful about the wording of the trust deed, if discretionary. If they are named, then some lenders will still require personal guarantees from them.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of danielfieldsdanielfields
    Member
    @danielfields
    Join Date: 2010
    Post Count: 2

    Thanks… and if they are not on the title?

    Thanks again
    Daniel

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I thought I covered that.

    They would need to be a beneficiary of a trust.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ediot123ediot123
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    @ediot123
    Join Date: 2007
    Post Count: 54

    What is a good website I can visit to get more information on trusts and how it can work in property.

    Preferably something with diagrams to show how the trust structure would be setup etc…

    Thanks

    Profile photo of TerrywTerryw
    Participant
    @terryw
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    Post Count: 16,190

    There is nothing really out there like that. You will need to see a solicitor and/or accountant to see what would work for you.

    try trustmagic.com.au for some info
    taxlawyer.com.au

    Or you can buy the expensive http://www.taxinstitute.com.au/publications/new-trust-structures-guide-2010

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of ediot123ediot123
    Participant
    @ediot123
    Join Date: 2007
    Post Count: 54
    Terryw wrote:
    There is nothing really out there like that. You will need to see a solicitor and/or accountant to see what would work for you.

    try trustmagic.com.au for some info
    taxlawyer.com.au

    Or you can buy the expensive http://www.taxinstitute.com.au/publications/new-trust-structures-guide-2010

    Thanks Terry

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