Hi Folks,
My partner and I are in the process of buying an apartment off the plan.
The contract was signed in her (individual) name last year, and completion is due in the next few weeks.I have just read Steve’s chapter on “Structuring” and the importance of setting up Trust Funds in order to achieve a potentially unlimited borrowing capacity, and am concerned that it might be too late to change the contract to have it in the name of a Trust Company as trustee for a Trust Fund instead of her individual name.
At this stage, the valuer has not gone in to the property and we are in what I understand to be the “Pre-Settlement Phase”. ie. mortgage documents have not been signed.
…Is it too late to set up the Trust??
or are we destined to have this debt in my partners name (until we sell it?) ?!You havn't mentioned which State your purchasing the property in, however usually the Trust will need to be established prior to signing of any Contracts etc
You may be trying to shut the gate after the horse has bolted
Thanks MarJac, I fear you may be right.
Purchasing in SA.Hi onebiggumby,
I purchased a Town House in "my name and nominees" in SA last December when I did not have a company structure. After some quick introductions to a new accountant and conveyencer I THEN set about the establishment of the Trust and the Company.
Costs to change the contract were $100 handled by the conveyencer. All other costs were from the accountant to set up the company and trust structure. (around $1000).
Expect a lot of hassle with the banks as it will affect the loan structure and increase costs as you will probably need Directors guarantees as $200ea. Plus Solicitors fees to approve your company trust deeds etc etc.
Hi,
A little bit of track – and maybe a silly question – but do you need to set up a bank account for a trust? I have just purchased a property in the name of my trust but don't have a separate account for it… Shoud I…?
Thanks,
RJB
Firstly, that bit about unlimited borrowing capacity is not correct. A trust won't really help borrowing capacity in the way you think because of personal guarantees.
Secondly, it is never too late – but you will probably be up for stamp duty again unless you could establish that the trust existed before the contract was signed and the person signing it was signing as trustee. Best to speak with your lawyer as there may be other ways to do it.
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
RJB wrote:Hi,A little bit of track – and maybe a silly question – but do you need to set up a bank account for a trust? I have just purchased a property in the name of my trust but don't have a separate account for it… Shoud I…?
Thanks,
RJB
RJB,
Suggest you clarify with your accountant very soon as you will not be able to demonstrate separation from your Trust vs perasonal accounts / other affairs if it is not financially at arms length.
I use my personal credit card for some purchases but do a transfer from the compay account back for same value as payment for the receipted item. All items that can be paid via BPAY are don directly from the Company account.
This is my first tax year with the company structure and other property is either sole owner or tenants in common so may still have some learning when I front up for my taxation submissionYes, your trust will need a separate bank account. You are not your trust and you should not be treating the trust's money as your own or you may be breaching your fiduciary duties. Failure to distinguish the trust's assets from your own may also mean it is a sham trust or not a real trust. Not a good asset protection strategy.
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
Onebiggumby,
I have received your email but no phone number to call you on or ability to reply via your forum profile.
Please enable private email contact via the forum or contact me via the contact mail with a phone number.regards,
TassieJHHi
We are new to investing and bought a property last year. Can someone tell me about trusts and when you should set one up please?
Cheers
KalkatKalkat wrote:Hi
We are new to investing and bought a property last year. Can someone tell me about trusts and when you should set one up please?
Cheers
KalkatThey can be set up at any time, but you really should do it before you purchase the property.
If you want to transfer an existing property you own into a trust you will be up for:
– stamp duty
– legals
– CGT
– new loans /exit fees from the old etc.
and have much less asset protection for the property.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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