- MsTrumpParticipant@mstrumpJoin Date: 2008Post Count: 27
While I’m enthusiastically searching for the answers, I would appreciate some valuable input in the meantime:
I have four properties to my name and am looking at adding more to the portfolio. At what stage do I start looking at trusts vs buying in my name? My main concern is the generated profit in, say, 10 years, or rather the tax that will attract. I know trusts can have benefits in that regard.
I’m also worried about asset protection, especially in the event of separation and/or being sued.
You should consider trusts from the first property onwards – not neccessarily using trust to own one but to at least consider it..
Trusts generally don’t help much under the family law sideMsTrumpParticipant@mstrumpJoin Date: 2008Post Count: 27
What are the benefits? And how would I go about setting it up?
Benefits are broadly
See my book “Trusts and Tax for Property Investors”
download for free at http://www.propertytaxsolutions.com.au/
To set one up you should seek legal and tax advice and have a lawyer draft a deed. For stamp duty purposes trusts are generally set up with cash, just $10 or so, and this is added to later.Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010
Trusts can have very real benefits, but for some people they can be rather superfluous or ‘over kill’. As Terryw has mentioned, it is well worth considering, weighing up the pros and cons of buying in the type of structure. Finance can be affected by purchasing through a trust – something to keep in mind.tanner892Participant@tanner892Join Date: 2013Post Count: 25
Surely you wouldn’t want to hold property in a Trust if they are negatively geared ?tysmeisterParticipant@tysmeisterJoin Date: 2015Post Count: 3
There are a couple of different trust structures that you could use, a “unit trust” and a “discretionary trust” (or family trust). Without more information about your circumstances the following information is predicated upon the latter (which is suitable for tax optimisation within a family structure). The “discretionary trust” allows for income earned within the trust to be allocated to nominated beneficiaries at the discretion of the trustee. Thus if your spouse, who is a beneficiary is on a lower marginal tax rate you can stream income and realise a tax saving.
Some things to bear in mind:
– Any child under 18 who is a beneficiary under the trust will have any distributed income taxed prohibitively at the top marginal rate
– If you are the only beneficiary you cannot also be the trustee, however you can incorporate a Pty Ltd company of which you are sole director to act as trustee
– You will need a settlor to create the trust with a token amount (e.g. $10) and this should ideally be your accountant, lawyer or some other unrelated party (it cannot be a beneficiary). Once the trust is settled the settlor has no further rights or obligations.
A child can earn up to $416 pa and not pay tax. Not much but it all helps.
A beneficiary can be trustee and the trustee can be a beneficiary, but not the sole beneficary as otherwise there would be no trust.