Family Trust

[AndrewS]

I was wondering if someone could help me understand family trusts.

If I had say $50k in a personal bank account, and transferred this money into a family trust that I had previously set up, can I at a later stage get some of this money back, say $25k without any problems in respect to my personal tax status?

I am concerned that I would have to declare this 25k as personal income, even though it was me that put the money into the trust in the first place. I have been distibuting income from the trust each financial year.

Regards


AndrewS

 

[ggumpshots]

You are loaning the funds/capital to the trust and the trust is returning the funds/capital. No tax implications if that is what you mean

 

[monoply]

As I understand it, you can gift the money or loan the money.

If you gift it, you could not get it back without paying tax on it.

If you loan it, you can get it back when you want. I think if you loan it, the trust has to pay you interest on the loan?

Cheers
mono

 

[austini]

Hi Andrew,

As you are loaning personal funds to the trust which are not borrowed you won't be incurring any interest. So if you want to fund the trust and have access to these funds at a later date without incurring tax then just create a trust minute detaling this loan accordingly.

Where interest repayments are involved then having a formal loan agreement in place can sometimes be warranted. However it appears that for most personal loans to a trust minuting is all that is required.

Note that any personal loans to a trust are exposed to risk from litigants. If possible it is wise for the trust benificiary with the lowest level of risk to make the loan to the trust.

Note that these are just opinions and not advice.

Cheers - Gordon

 

[tubs]

Andrew

The big question is WHY do you want to do this. If it is to reduce your exposure to litigants then lending it to the trust is not much use as a litigant would be able to claw it back from the trust. In this case you would have to gift it to the trust and then borrow it back when you need it. Just remember, once it has been gifted, it is there and belongs to the trust and cant be given back.

 

[AndrewS]

Thanks for the replies. Accountant has set my mind at ease. Money deposited into trust is deemed a loan and withdrawing a repayment.

AndrewS