Anyone NOT using a trust?
- Thread starter Ultra
- Start date
A lot of investors don't use a trust structure for various reasons (and I am one of them). The reasons might be:
1. Tax minimisation with negative gearing
2. No family to distribute income or pass on the assets
3. High risk tolerance in regards to letigation risk
4. Carelessness
5. Low value - hard to justify fixed cost of running a trust
Cheers,
Lotana
1. Tax minimisation with negative gearing
2. No family to distribute income or pass on the assets
3. High risk tolerance in regards to letigation risk
4. Carelessness
5. Low value - hard to justify fixed cost of running a trust
Cheers,
Lotana
What a fantastic question! With everyone concentrating on using trusts - a real lateral step to ask who isn't using them...
Sunnywan,
Agree on point 1.
With point 3 I simply meant that some people believe that the chace of asset loss is so small it is not worth the money spent on setting up and maintaining a trust structure (given there is indemnity insurance in place).
Point 4 would be better to call 'Ignorance'.
I personally agree with most on this forum that a hybrid trust is the way to go in most circumstances.
Cheers,
Lotana
Agree on point 1.
With point 3 I simply meant that some people believe that the chace of asset loss is so small it is not worth the money spent on setting up and maintaining a trust structure (given there is indemnity insurance in place).
Point 4 would be better to call 'Ignorance'.
I personally agree with most on this forum that a hybrid trust is the way to go in most circumstances.
Cheers,
Lotana
On top of the previous points raised at the start of this tread I choose not to use a "trust" because it does not allow me to redraw the accumulated increasing equity from capital growth for my personal lifestyle or personal investment use.
This is the key reason why I have personally chosen a Non Trust set up in order to fund my early financial independence.
This is the key reason why I have personally chosen a Non Trust set up in order to fund my early financial independence.
Hi Rix
With relative ease, its done "all the time". The "borrowing" entity most commonly does not need to be the same as the owining entity as long as guarantees are given.
This is how Hybrid trusts can work to provide gearing benefits.
The individual is the borrower but the trust owns the asset.
Ta
rolf
With relative ease, its done "all the time". The "borrowing" entity most commonly does not need to be the same as the owining entity as long as guarantees are given.
This is how Hybrid trusts can work to provide gearing benefits.
The individual is the borrower but the trust owns the asset.
Ta
rolf
Hiya Rix
Yep if the right structure is used, Not the easiest thing to get finance for, but not that hard either.
Ta
rolf
Yep if the right structure is used, Not the easiest thing to get finance for, but not that hard either.
Ta
rolf
B
brains
Guest
Im not using a trust because when i bought my IPs i didnt know about trusts (Lotanas point # 4).
Recently i had a chat with my accountant re trusts and he said im not in a high litigation risk occupation (like doctors or lawyers) and the cost of moving existing assets into a trust (stamp duty) makes it prohibitive. So i dont use a trust , not saying i wont in the future, but i havnt previously for the above reasons.
HIya all,
Just on that thing about the hybrid trust having the advantage of being able to access neg gearing benefits NOW rather than waiting for the trust to make a profit....I got thrown for a loop yesterday when I went to see an accountant. After reading this forum and other material, I'm coming to think a hybrid trust is for me. So I happily trotted off to see this accountant to ask their opinion and they told me that you can NOT distribute neg gearing benefits to the unit holders of the hybrid trust! They said there is no trust available that will let you do such a thing.
He's wrong, isn't he???
John
Just on that thing about the hybrid trust having the advantage of being able to access neg gearing benefits NOW rather than waiting for the trust to make a profit....I got thrown for a loop yesterday when I went to see an accountant. After reading this forum and other material, I'm coming to think a hybrid trust is for me. So I happily trotted off to see this accountant to ask their opinion and they told me that you can NOT distribute neg gearing benefits to the unit holders of the hybrid trust! They said there is no trust available that will let you do such a thing.
He's wrong, isn't he???
John
Either he's wrong, or Dale's wrong. And my money is on Dale being right...
Hi
Yes, he is wrong. You personallyborrow the money from the bank and as such you personally get the tax deduction for the interest and bank fees that you pay on that loan.
The trust receives the cash from you and it uses that money to buy an IP. Because that Ip has no loan interest it is very likley to be positively geared and the trust will then distribute this gain to you which will be less than the bank interest that you pay.
So, let's say that you pay the bank $14,000 interest and receive a $4,000 profit from the trust. That leaves you with a $10,000 loss which offsets your personal wages or other income which translates to a tax refund of between $3,150 and $4,850.
I hope that this helps
Dale
Yes, he is wrong. You personallyborrow the money from the bank and as such you personally get the tax deduction for the interest and bank fees that you pay on that loan.
The trust receives the cash from you and it uses that money to buy an IP. Because that Ip has no loan interest it is very likley to be positively geared and the trust will then distribute this gain to you which will be less than the bank interest that you pay.
So, let's say that you pay the bank $14,000 interest and receive a $4,000 profit from the trust. That leaves you with a $10,000 loss which offsets your personal wages or other income which translates to a tax refund of between $3,150 and $4,850.
I hope that this helps
Dale
