All Topics / Legal & Accounting / Refferral required for a professional that can help set up a Trust for Property Investing

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  • Profile photo of DaOneDaOne
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    @daone
    Join Date: 2008
    Post Count: 38

    Hi

    I am not sure if this has been discussed in the past. I am looking for a professional / company that can help to set up trust and corporate trustee that will be suited for property investing. Can anyone Suggest appropriate persons and cost I can expect to pay.

     

    DaOne | Oras Finance - Your Local Mortgage Broker
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    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi there

    Where are you located?

    Do you prefer face to face or are you willing to deal via phone/email?

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of RPIRPI
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    @rpi
    Join Date: 2012
    Post Count: 308

    Hi

    Lawyers are the first point of call, they will assist in setting up your whole structure.  Accountants are not legally allowed to do this and are not covered by their insurance for doing this.  Many however do.

    While many Accountants will not like what I say below, I am just stating the technical legal position.  The intention of the legislators has not changed or otherwise they would have allowed tax agents to provide legal services related to tax law under the Tax Agent Services Act 2009

     Accountants do setup trusts, but they should not technically be discussing who the appointer is or the benefits of a corporate trustees are unless they also have a lawyers practicing certificate.  They should not be discussing Asset Protection.  If they do it wrong there insurance will not cover them as their insurance policies specifically preclude engaging in legal practice.

    Courts have found that even an accountant filling in the details of a trust deed which has been prepared by lawyers still constitutes legal advice and they have no authority to do so.  Courts have also found that the following constitutes legal advice and can not be done without a current legal practice certificate:

    1. providing advice about Director's obligations

    2. Drafting trustee resolutions

    3. Interpreting a trust deed

    4. Providing a trust deed to a client from a website

    Interestingly enough, even though it is a widely held belief of Accountants, they are not allowed to provide advice on Tax Law, even if provided in relation to the preparation and lodgement of a tax return. (Sinclair v Commissioner of Taxation) except if they are a licensed tax agent and the service is limited to:

    1. ascertaining liabilities, obligations or entitlements of an entity that arise, or could arise under a taxation law.

    2. or advising an entity in relation to 1.

    Although even more Accountants would do the above.

    The biggest problem in Australia is that Accounting is not a licensed or protected profession.  Anyone can call themselves an Accountant.  Anyone can practice as an Accountant without insurance.  There is a restriction on tax agents or by the associations CPA, CA etc but not a legislative one.

    Accountants are losing more and more of their ability to provide services.  From 1 July 2016 they will no longer be able to provide SMSF advice without an Australian Financial Services Licence, because that is providing financial advice.

    There are great accountants out there (as the ones on this forum) and I will always recommend that you take my structure to an Accountant so that they can advise you on the liabilities, obligations or entitlements of an entity that arise, or could arise under a taxation law.  T

    RPI | Certus Legal Group / PRO Town Planners
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    Profile photo of DaOneDaOne
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    @daone
    Join Date: 2008
    Post Count: 38

    Hi

    Thanks, I am in SE suburb of Melbourne. I am happy to work over the phone / Email. I know what I want, but I just want to ensure the trust deed is made to provide maximum protection and benefit for property investing. Please note that I am a Mortgage broker myself.

    DaOne | Oras Finance - Your Local Mortgage Broker
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    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    It is not just the deed that is important, but how the trust is conducted is important.

    eg. I had a client which was a company trustee of a discretionary trust. The trustee had been giving mum a distribution for years. But this was only a paper distribution with no money ever paid over. It was what they call a UPE, unpaid present entitlement. over the years mum was 'owed' about $200,000 by the trust.

    Mum died. Guess what happened next – the executor of her estate was legally obliged to call in any money owing to mum. They asked the trust to hand over $200k. The director of the trustee was the son. He refused to believe there was a loan and he refused to play ball. The trustee was sued in the supreme court and the trust lost. The trust now has a judgment against it. Thousands of dollars have been lost in legal fees and now assets of the trust are about to be taken to satisfy the judgment debt.

    This is just one example.

    Another example is losing control of the trust. Look at the reinhart problems in the NSW Supreme Court. It is possible for a beneficiary to apply to the court to remove the trustee and appoint another trustee. Don't forget the trust assets do not belong to you or hte trustee, the assets belong to the whole of the beneficiaries of the trust. The trustee is just the legal owner for their benefit.

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

    Profile photo of RPIRPI
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    @rpi
    Join Date: 2012
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    Hi DaOne

    I would go with Terry W,  he knows his stuff.  Is Sydney based.

    RPI | Certus Legal Group / PRO Town Planners
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    Profile photo of DaOneDaOne
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    @daone
    Join Date: 2008
    Post Count: 38

    Hi

    Understand there are complications, and thanks for highlighting some of the issues. What are the solutions and who can help provide it??

    DaOne | Oras Finance - Your Local Mortgage Broker
    http://www.ihomeloans.net.au/
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    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Da One i would also second Terry for his expertise in this area.

    I flew down to Melbourne last week to see some SMSF clients so if you want top advice i would make an appointment with Terry and jump on a plane and go and see him.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
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    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Thanks Richard,

    The solutions are to be aware of potential problems and ask yourself what could happen. You can't plan for everything, but you can plan for many things. It is just knowing what could happen.

    Another potential problem is death (usually a problem to the deceased!). If you die any trust assets do not pass in your will. Roles don't pass either. So 'your' trust could fall into the hands of someone who you wouldn't want to control it.

    I had another client whose father died and the son was the back up appointor of the trust. So on death of dad he was the appointor. But he didn't know this. It took him about 7 years to come across this fact. I think it only surfaced after the death of his mother who was the director of the trustee company. The trust fell into the hands of other family members who were manipulated by the family accountant who milked the trust. Records are missing so they don't know how much money has disappeared but it is substantial.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of taxdivataxdiva
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    @taxdiva
    Join Date: 2011
    Post Count: 25

    I have just settled our first SMSF property. I have found you will not find a sound one stop shop re setting up your structure. I have one accountant who does my personal tax and another for my SMSF . The accountant I used was Lee and Lee in Brisbane. Very professional. Give lots of seminars and keep themselves up to date. It if feels more like dealing with another property investor.

    Profile photo of Anthony KAnthony K
    Participant
    @anthony-k
    Join Date: 2010
    Post Count: 56

    Hi All

    Yes,

    Darryl is right

    always go first to a lawyer as they have insurance to protect your position,

    They tell you they are experts but they can still get it wrong, and

    Not many law firms have experience in depth in SMSF law because 99% only just discovered them.

    Ask John Symonds about lawyers, He is having to sue Gadens for $11M,

     because they apparently caused a   F.Up with his work and allegedly cost him that.

    Isn't that a comforting thought?

    When they are wrong you have to sue them, if they were honorable men why don't they just pay up?

    No if they get it wrong you must fight their PI insurance company as lawyers must not admit liability.

    Promise every thing and admit nothing.

    Great system and we all know you can trust a lawyer.

    Am I unfair ?

    No, just been disappointed.

    Anthony

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Anthony,

    This thread is about trusts in general not SMSF.

    I’ve often wondered what authority accountants/tax agents or financial planners have to legally advise on the set up of trusts and SMSFs, but have never looked into it.

    I know that under the Corporations Regulations recognised accountants, such as CPAs, CAs, or NIA members are able to provide limited advice for SMSFs. I think this exemption only covers advice which would only cover what would otherwise be classed as financial advice. I don’t think this covers legal advice or legal services – which would probably be defined under the Legal Professional Act

    But advising on non SMSF trusts is a different matter.

    I recall mention of a WA case where an accountant got into trouble for providing legal services.

    You obviously know much about SMSF law and Tax law, what is your take on this. What can lawyers do and not do, and what can accountants do and not do?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Have to disagree about a 1 stop shop in Brisbane for everything Tax wise.

    Steve Hodgkinson from the Gold Group who is a contributor to the site is an expert on SMSF and covers every area of the business from structure set, up Tax returns and SMSF Audit.

    He has been my accountant for 15 years and we finance 101 of his SMSF clients.

    Remember not all Accountants are set up to carry our SMSF Audits.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of DaOneDaOne
    Participant
    @daone
    Join Date: 2008
    Post Count: 38

    Hi Terry

    i have contacted you through your website as you do not have any contact number.

    when I expect to hear back from you

    DaOne | Oras Finance - Your Local Mortgage Broker
    http://www.ihomeloans.net.au/
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    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi DaOne,

    Sorry about the delay, I just found your email in my spam box.

    Will call you tomorrow.

    Terry

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Anthony KAnthony K
    Participant
    @anthony-k
    Join Date: 2010
    Post Count: 56

    Hi Terry & All

    Terry I did not mention SMSF at all unless you can point it out for me?

    We have been establishing trusts of all kinds since 1978 including some we have designed ourselves such as our Fintel Group Pty. Ltd. TEBL Trust™ in 2004 and a joint SMSF-Unit Trust in a single document in 1995. Our TEBL Trust™ can produce after tax profit results around 28% higher than a standard discretionary trust and is designed to reduce debt more rapidly than alternate methods. Remember also that all lawyers subscribe to the law industry standard precedent document computer library, so just because they can produce a deed It won’t guarantee that it is correct for your situation.

    Accountants & Financial Advice Exceptions

    The details on Accountants and exceptions regarding financial advice are contained in Regulation 7.1.29 of the Corporations Regulations and cover companies like A4Companies. Accountants are specifically covered under Reg. 7.1.29A but this is changing on 1st July 2013 when the FOFA comes into force.

    Unfortunately being “qualified” does not always prove much, the fact you managed to scrape by in an examination 20 years ago does not provide much comfort to a client and nor do Darryl’s assertions that “lawyers” are some sort of gods and are infallible. The constant references to Professional Indemnity is designed to allay fears and pretend that whatever happens it will not cost you money. If you have not had the experience of taking on a law firm in court in a negligence case, you have no idea of what is involved. It costs a lot more than money there is also skin and emotion involved.

    The old property adage of “caveat emptor” could be well applied to advice whether it is from a “professional” or any other person. Paper certificates on the office walls are not a substitute for advice based on well researched current material applied to an individuals personal situation. When I held a FP licence from 1991 to 2004 it was incumbent to “know your client” this is a condition that should be applied to all advisors. When I learned my “trade” (and I am still learning) it was on the basis that “a problem well stated, is a problem half solved”  this aligns accurately with “know your client”.

    Regards to All

    Anthony K

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi Anthony,

    Yes, I agree with much of what you had written. I had assumed you were talking SMSFs because you mentioned it above:

    "Not many law firms have experience in depth in SMSF law because 99% only just discovered them."

    I am a lawyer, but don't subscribe to the law society precedents (as I don't think they are very good).

    I agree that accountants can provide limited financial advice. But I believe accountants are not able to give legal advice. The setting up of structures involves the provision of legal advice. Most accountants think they can get around this by just using a deed prepared by lawyers, but advising a client on the positions of the trust such as who should be trustee and how to structure the appointor, etc is legal advice. Would the standard accountant's PI insurance cover them for this if things went wrong? probably not if they are giving legal advice. So a client suing an accountant may be left with nothing to sue but a $2 company.

    If a lawyer set up the structure and stuffed it up then the client would be able to sue the lawyer and the lawyer's PI insurance will usually cover them.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of RPIRPI
    Participant
    @rpi
    Join Date: 2012
    Post Count: 308

    Anthony

    Where did I say lawyers were gods. Heaps of lawyers are absolutely hopeless.  

    I discussed the legal side of it. There are numerous cases that outline what accountants can not do.

    The reason I talk about insurance is because half of my practice revolves around whether someone has insurance cover for their actions or not.  If they have insurance cover, it doesn't matter what entity they operate through, what their assets are etc, Insurance companies have cheque books.  The biggest judgement in the world is pointless if there is no money/assets to pay it.  

    Paper certificates on the office walls are not a substitute for advice based on well researched current material applied to an individuals personal situation.

    True, but if you don't have the paper certificate relating to law and the right to be an Australian Legal Practitioner it is illegal to do it.  Someone could have been researching it forever, be all over it better than a professor of law who has devoted his life to that one issue, a 20 odd year old kid with the right papers is allowed to do it, the knowledgeable guy is not.  Whether it is fair, you like it or not,or whatever else, that is the way it works.

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    Profile photo of Anthony KAnthony K
    Participant
    @anthony-k
    Join Date: 2010
    Post Count: 56

    Hi Darryl, Terry and All

    No, it is not against the law to provide legal advice.

    It is only illegal to charge a fee for doing so.

    Anyone can give as much free advice as they choose. The legal profession act in NSW and other states only proscribes a non legal person charging a fee,

    This is because lawyers are all mostly about money, and what they want and need is a protected environment in which to operate. Also passing the buck to an insurance company and making others responsible for your mistakes tends to make you care less about how you perform and about outcomes for clients.

    I think if more lawyers were into giving free advice the prices would tend to reduce and a better system would be where they provide a binding quotation rather than the open ended Costs Agreement that has no upper costs limits.

    In my view this is a long overdue consumer protection that should be initiated.

    Don't forget Darryl we are all allowed an opinion, that's why we come here to share them with others – for free.

    Regards to All

    Anthony K

    .

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Anthony,

    What legislation are you basing this on?

    Consider s 14 LPA in NSW

    http://www.austlii.edu.au/au/legis/nsw/consol_act/lpa2004179/s14.html

    (1) A person must not engage in legal practice in this jurisdiction unless the person is an Australian legal practitioner.

        Maximum penalty: 200 penalty units.

    and s4:

    "engage in legal practice" includes practise law.

    "Practice law" isn't defined but would likely include giving legal advice.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

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