All Topics / General Property / How and Where to Set up Trustee Company?

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  • Profile photo of mushirkhanmushirkhan
    Participant
    @mushirkhan
    Join Date: 2011
    Post Count: 12

    I have scanned the site and also read Steve’s book but have not find any information about how to set up trust. I am newbie and would like to know this. Can any knowledgeable individual on this site explain it briefly? Is it registered through ASIC or in some other way, why? Any help will be appreciated.

    Thanks,

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470

    Read the book "Trust Magic" by Dale Gatherum Goss, "What Every Property Investor Needds to Know about Finance Tax and the Law" by Michael Yardney and/or 'Family Trusts" by Nick Renton. These books are quite good and explain the basics.

    Cheers,
    Luke

    Profile photo of luke86luke86
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    @luke86
    Join Date: 2010
    Post Count: 470

    Trusts aren't registered with ASIC, but a corporate trustee (a pty ltd company) if one is used needs to be. Trusts are registered with the Office of State Revenue and also Land Titles Office (I think) in the state it was set up.

    Luke.

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Those books mentioned by Luke are all excellent and I too recommend them.  I also suggest you get an expert accountant or solicitor to advise you on trust structures, as there are a lot of them.  I'd suggest you contact Terryw, a very regular contributor to this forum.

    Cheers, Paul

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

    Trusts are usually set by by a settlor giving a trustee $10 or so and asking them to hold it on trust for a group of beneficiaries. The terms of the trust are documented in a deed and this deed governs the actions of the trustee and specifies what they can and cannot do – such as borrow money, mortgage trust property, invest in businesses etc

    The deeds are not registered. It is just a private arrangement really. In some states such as NSW stamp duty must be paid on the deed and this is $500 if the settled sum is just $10 or a nominal amount. This is done at the Office of state revenue. You post or take your deed there and they will stamp it on the spot. They don't read it or keep a copy.

    Where a deed needs to be stamped will depend on the location of the parties. I think the rule is that if any one of the original parties residies in NSW then the deed needs to be stamped here, eg settlor, or trustee etc

    Each state has its own legislation regarding trusts – Trustee Act in NSW, Rules are different in each state too. So the trust deed needs to specifiy the governing laws – ie which state. This is separate from the stamping and could be different.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,190

    That was the trust. The trustee is a separate issue.

    The trustee can be a person or a company (or combo). A company needs to be registered with ASIC as Luke mentioned.

    There used to be an advantage to register a company in VIC. This involved stamp duty savings.

    For the trusts some promotors reckon setting up in South Aust is the best because this is the only state not to have a life limit on trusts. Elsewhere trusts can only last 80 years max and then their assets must be transferred to beneficiaries (CGT and stamp duty).

    But the law is unclear if SA can really produce trusts with unlimited life. What needs to be done is unclear. I would think the trustee would need to be resident of SA as the settlor and possible the trust assets must be located there.

    You should seek advice before setting up a trust as the legal ins and outs are very complex

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of mushirkhanmushirkhan
    Participant
    @mushirkhan
    Join Date: 2011
    Post Count: 12

    I researched some more and found that Settlor cannot be Beneficiary, now ofcourse I want to be Beneficiary which means I cannot be Settlor so I need to have some trustworthy person to be Settlor. Can I be Trustee and Beneficiary though? and another thing is can a Trustee or Beneficiary be Guarantor?

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

    A settlor can be a beneficiary but there are adverse tax consequences so they shouldn’t be.

    The settlor’ role is to hand over $10 or so to the trustee and start the trust. So they don’t need to be trustworthy at all as this is their only role. Usually the trustworthy lawyer or accountant performs this role. As you don’t want a family member to do it for tax reasons

    What do u mean by guarantor? A trust or beneficiary can guarantee a loan for the trust if the lender permits it

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

    You can be both trustee and be a beneficiary but not the Only beneficiary otherwise there would be no 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/

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