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Hi Redwing,redwing said:Hi guy's anyone know much about this company (or group) they seem to know their stuff?
or Ed BURTON?
REDWING
redwing said:I've had a look at some of the structures via Chris Battens group MGS on their site, the whole business seems very complicated with a myriad of structures..and the different Asset Protection Specialists also seem to have different opinions, i guess there is no "one" best structure..
HDT's seem to be good for the average property investor?
redwing said:Someone was saying a respected property investor we know uses a basic Family Trust with a $2 company involved for asset protection..i'm also interested in the other benefits of the Trust structures, though we all have to be aware of litigation in this day and age..
Without holding you down to $ and c wbthom and knowing each situation is different..what are the normal charges for average investors when setting up these structures, and maintaining them each year?
REDWING
coastymike said:With a unit trust and all the units issued to a hybrid discretionary trust (the most flexible structure as Chris Batten would say)
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Coastymikecoastymike said:Bill,
I agree that hybrid trusts can be difficult for the average person to understand. However if you want to obtain the benefits of negative gearing to the highest income earner and also hold the property in a trust how can it be done without the use of a HDT. In this case the individual is borrowing funds to purchase special income units in the HDT (used to earn income and therefore the interest on the loan will be deductible) which the trust then uses those funds to invest in property. If you borrow funds from the bank and then lend these fund to a discretionary trust you wont be able to get the benefits down to the highest income earner.
You are correct- this is generally way too costly. Some people would just put all future investments into a trust to protect them and accept the risk on the old assets. You can however also use other strategies to protect existing assets in a more cost effective way (eg cross securitisation and 2nd mortgage strategies).coastymike said:If you are simply looking at asset protection and the property is positively geared or not even earning income then a discretionary trust may be appropriate. However the capital gains tax and stamp duty on the transfer to a trust could be significant. If the asset is pre CGT it is even worse because the moment you transfer it to a trust you loose the pre CGT status.
coastymike said:Bill,
..... If the trust is loaning the funds and you end up with a revenue loss after taking into account interest deductions you are going to have to meet the trust loss rules or alternatively make a family trust election to carry these losses forward.
coastymike said:However later on when the investment becomes positively geared you can just redeem the special income units and you have the same type of protection with everything in the trust and the individual owing nothing. Best of both worlds with a small amount of compromise. I'd like to know any legal cases involving a trustee in bankruptcy who has claimed for the value of the special income units and what was awarded in those cases. If no cases are forthcoming then it weakens the argument that is sometimes put forward but what if. No what if. What has happened in the courts.