Hi everyone, this is my first post. I've been doing some study and there seems to be varied advice in regard to setting up a structure for asset protection. I have read that some investors are setting up a trust structure for each individual property purchase – does this seem a little like overkill or is it a wise move? Would appreciate your thoughts/comment/personal experiences in this.
Cheers!
Hi Meggy
Welcome aboard
Without knowing too much about your situation it's impossible to advise on an ideal structure for your circumstances.
However, as a generalisation – having a trust set up for each property does sound a little like overkill.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
If you want asset protection then you should look at using discretioanry trusts and superannuation as your investment vehicles.
But it is not just the type of trust that is important but how it is structured and how it is used. Getting it wrong or messing things up can result in litigation and or loss of assets.
See this recent NSW case involving a discretionary trust – things got a bit messy and a grab was made for the trust assets
Lewis v Condon [2013] NSWCA 204
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 Jamie, appreciate your comments!
Thanks Terry – I will take a look at the NSW case. I appreciate you replying and providing this information. Cheers, Meg.
Hi Meggy, do you have a specific need for asset protection (ie: are you a director of a company or run your own business?) or are you talking just in general?
As said above trusts may not be effective depending on the circumstances. As a general rule if someone is doing something really wrong (ie: fraud/illegal activities) then the courts will look beyond the legal setup.
Hi Blockey, thanks for this information. I'm looking at setting up the right structure, I will be buying properties to renovate and either sell or hold. I currently have a family trust with a company trustee and a separate 'trading' company which is registered for GST. I know that the structure will depend on my personal circumstances but wanted thoughts from those who have already been doing this as a business to get some insider knowledge (which I don't have yet!). I really appreciate all the comments I'm getting as it really helps with my own thoughts about the best structure. Thanks again everyone, really appreciate your help!
Meggyb7 wrote:Hi Blockey, thanks for this information. I'm looking at setting up the right structure, I will be buying properties to renovate and either sell or hold. I currently have a family trust with a company trustee and a separate 'trading' company which is registered for GST. I know that the structure will depend on my personal circumstances but wanted thoughts from those who have already been doing this as a business to get some insider knowledge (which I don't have yet!). I really appreciate all the comments I'm getting as it really helps with my own thoughts about the best structure. Thanks again everyone, really appreciate your help!You could possibly use the existing non trading trust. But you should consider the terms of the deed, who plays what roles, existing assets of the trust (potentially exposed) and the strucutre of the trustee company – constitution, shareholders, directors, shareholder agreements,
Also succession of appointor on your death or incapacity, including legal incapacity same with the company.
However, using a fixed unit trust may be worth looking at. Later on you will have the option of transferring the units to a SMSF, being paid cash for the units and usin the funds to pay off any non deductible debts. Once in the SMSF and you are over 55 the income and CG from the property could be totally exempt from tax.
Also refinancing principal means you could borrow for non deductible items and have the interest claimable.
Stamp duty on transfer nil or lower than transferring title.
Many advantages of a unit trust. You can even achieve asset protection by having the units owned by a properly drafted discretionary trust.
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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