Forget about trusts!

If you are just an average investor , forget about trusts. You realy realy don't need them!! I also got right into all the " trust' hype for a while, especially after reading a lot on forums.

My advise-
1-set up a company if you run a business.
2-set up an additional partnership with yourself and your spouse.
3-buy all your property through the partnership, in both names some in individual names depending on your incomes.
4- set up some equity loans and pay your big bills from these when your cash flow is a little low.

There are many threads on this on here, and I did exactly what I read on this forum, from a past thread.

Property investing realy does not need to be that hard. And if you are happy to just retire early, without being a billionaire, it is very achievable, over time.
You can only spend a certain amount of money, if you are an average person, so aim for that, rather then being too greedy.
 
Just my 2 cents worth. I wouldn't be advising anyone against trusts straight up.

People have different circumstances and reasonings, and as repeatedly said for everyone to do their own research to see what works for them. Don't blindly follow what people have said. Make informed decisions.

Just thought i'd mention this so anyone (newbies etc) do not fall into a trap and follow anyone on here.

It's advice, but not to be followed it's just a guide :)
 
Just my 2 cents worth. I wouldn't be advising anyone against trusts straight up.

People have different circumstances and reasonings, and as repeatedly said for everyone to do their own research to see what works for them. Don't blindly follow what people have said. Make informed decisions.


Hi, yes, this is a valuable 2 cents. Trusts may not always be a need for small investors but they may be useful in some circumstances. As is always the case, an investor should speak with both their accountant and their lawyer before making a decision on structuring instead of taking advice from an anonymous forum post. This would of course also include anything that I post here too.
 
If you are just an average investor , forget about trusts. You realy realy don't need them!! I also got right into all the " trust' hype for a while, especially after reading a lot on forums.

My advise-

lol and how would you know?
You bought a fairy tale and now come here to tell us it aint reality?
With all due respect, given what you did it don't seem to me your in a position to give "advise" nor advice.
But if you wanna share your experience, then I'll happily read it and may learn something as well.

I (and a few others)was here telling the story yrs ago, but this forum had "experts" :rolleyes:
Old 09-03-2005, 09:58 PM
Finally a bit of reality instead os a "mindless regurgitated sales pitch" in the positives and most importantly the negatives of trusts.

some ole threads:
http://www.somersoft.com/forums/showthread.php?t=15223&highlight=trust
http://www.somersoft.com/forums/showthread.php?t=18860&highlight=trust
http://www.somersoft.com/forums/showthread.php?t=19304&highlight=trust
http://www.somersoft.com/forums/showthread.php?t=18831&highlight=trust
 
If you are just an average investor , forget about trusts. You realy realy don't need them!! I also got right into all the " trust' hype for a while, especially after reading a lot on forums.

What about when your average investment now, may turn out to a tidy and profitable portfolio in 10 years time??

The decision should be based on a number of factors, so have to agree with Lil Skater and the others.

I don't know your stategy, as you might be a 'flipper', so in this scenario, in terms of asset protection anyway, may not be the best approach??

And Ausprop...... I am in your boat. Although it might be a little bit extra in management and ongoing costs, but I am planning for a healthy portfolio down the track in which case it will be a little bit harder for anyone to get there hands on, other than me and my beneficiaries.:)

Each to their own though.

Cheers,

F
 
Horses for courses.

Personally, DH and myself are not at this point using or planning to use any kind or trust, company or other such - because it does not suit us, our needs or requirements. We are simply purchasing in our own names. That is not to say that everyone should do this, some people are better advised to use a trust, some a company; but what works for one may not neccesarily work for another. And in the future, if our circumstances change (as they are apt to do) we may reconsider how we choose to structure things.
 
Just on the scenario described Bianca, I would also simply say no one solution fits all, however, with the scenario described, some points to merely CONSIDER are:

1. If you are running a business through a company, then you may also be a director so if somebody wanted to take action against the company, the director would most likley get roped-into such action;

2. If (in your capacity as a director) you get roped-into any legal action, any other assets you hold (e.g. your partnership interest) may be at risk;

3. Even though you may only have a 50% interest in your partnership and your spouse the other 50%, there may be other circumstances where the spouse's interest could be at risk;

4. Ignore everything I have just said if you are confident any business action can be "contained" to just the company, however, my experience is that whenever somebody "sniffs" money, they take action against any and everybody.

Trusts certainly have their uses, however, regulations are getting to the stage where you are forced to choose between maximising tax benefits or forgoing these for some form of commercial asset protection. It really comes down to what lets you sleep at night.

NOTE: All comments above are purely the personal opinion of the author and any reputable people he can steal them from without the threat of copyright infringement being thrown at him, in which case he will hide behind a wall of structures, second securities and his scary wife.

Zargor
 
NOTE: All comments above are purely the personal opinion of the author and any reputable people he can steal them from without the threat of copyright infringement being thrown at him, in which case he will hide behind a wall of structures, second securities and his scary wife.

LOL!

But i agree with your answer also, which is what i tried to outline to anyone that may see this and assume someone knows best.

There are some circumstances where you'd be mental not to have a trust, and for others, you're paying through the nose for something that has no real benefit for you as the individual. :)
 
If you're a property investor with a 9-5 job, theres no point having a trust, its too complicated and too expensive, its just not required, I have a hunch some people are trying to be too fancy.

If you got a cash flow positive property and want to hold it for your kids when they grow up, having it in a trust may be a good idea.

If you have cash flow positive properties generating a certain amount of income then once again trusts are good for tax minimisation strategies.

If you run your own business whereby you have a risk of being sued, then yes holding your properties in another trust is a good idea. But make sure you have sufficient income from your business so you can distribute income to your trust should it have losses.

But for the run of the mill property investors, just hold them in your personal names!
 
"If you're a property investor with a 9-5 job, theres no point having a trust, its too complicated and too expensive, its just not required, I have a hunch some people are trying to be too fancy."

Except if your 9-5 job puts you at risk of being sued. ie, Laywer, Doctor, etc.
 
Except if your 9-5 job puts you at risk of being sued. ie, Laywer, Doctor, etc.

Are the "9-5" corporate lawyers and doc that are employees of hospitals/med centres covered for liability by their employers? :confused: (other than illegal stuff of course)....

Cheers,

The Y-man
 
If you got a cash flow positive property and want to hold it for your kids when they grow up, having it in a trust may be a good idea.

If you have cash flow positive properties generating a certain amount of income then once again trusts are good for tax minimisation strategies.

But for the run of the mill property investors, just hold them in your personal names!

Hi, just wondering, how cash flow positive properties are not considered "run of the mill" for property investors? Even if some of these investment are initially negatively geared, what would you suggest if such investments were to become become positively geared in later years?
 
"If you're a property investor with a 9-5 job, theres no point having a trust, its too complicated and too expensive, its just not required, I have a hunch some people are trying to be too fancy."

Except if your 9-5 job puts you at risk of being sued. ie, Laywer, Doctor, etc.

I agree.
However, I'd add that a lot of people go the "complicated" path due to the fear factor promoted by many property and investment spruikers.
They like to portray things as risky and dangerous when you're on your own, but safe and secure if you sign up with us and allow us to share the secrets that nobody else knows.
Yeah, right!
I've been to many seminars where they tell people they will "lose everything" if anyone slips and falls on their property, including visitors, so you need to get us to help you navigate through the trust maze in order to protect yourself. But, you can only do that if you're in our "mentoring program".
I even know of people who have company and trust structures just so they can use the words "my company" and "one of my trusts" when they talk to people, so they sound important and knowledgable.
What they need is to learn how to boost their own self esteem instead of paying lawyers and accountants to build structures that elevate their esteem.
Companies and trusts are tools, just like cross collateralisation, capitalised interest etc etc.
The tools themselves are not good or bad. How they are employed and the applicability of that use is what determines if they are appropriate or not.
 
I had a friend who was on the top tax rate and had a wife who wasn't working. He purchased a property in Perth before the boom and I advised him to look into using a discretionary trust. Instead he just purchased in his own name for the 'tax benefits'.

The property doubled in value within 2 years and he sold. I worked it out he would have saved $27,000 in tax if he had used the trust.
 
But isn't this why they have professional indemnity / public liability insurance?

Y man, nurses are covered by employers, not sure about doctors.

Public indemnity insurance and public liability insurance is not a failsafe - particularly in instances of negligence, fraud, etc.

There are all kinds of reasons one minght be sued, sometimes not even in relation to their profession - their private assets are at risk. (they are to some extent with everyone).

For example, A Dr may not be covered by their insurance if they treat someone outside of their surgery / workplace. One day they happen to witness a motorvehicle accident. They are not covered it they treat anyone at the accident site. Someone is injured badly. Now lets say the Dr due to their morals and ethics treats this person, but something goes wrong - They could be liable. Now what if they chose not to treat that person, because they aren't covered, They could be liable. It's a no win situation, which is actually pretty common within the medical industry.

I have talked to many of my law lecturers and to friends within the legal industry. Those with significant assets, all have them set up under various trust structures or in their spouses name. Because it gives them one more barrier of protection.
 
Thanks, I see where your coming from, as for below, this sort of thing has happened in the past, but I think it is covered by the "good samaritan" clause/act whatever.:)

For example, A Dr may not be covered by their insurance if they treat someone outside of their surgery / workplace. One day they happen to witness a motorvehicle accident. They are not covered it they treat anyone at the accident site. Someone is injured badly. Now lets say the Dr due to their morals and ethics treats this person, but something goes wrong - They could be liable.
 
Companies and trusts are tools, just like cross collateralisation, capitalised interest etc etc.
The tools themselves are not good or bad. How they are employed and the applicability of that use is what determines if they are appropriate or not.

This is exactly right. A Trust is a powerful tool, however it is not right for everyone. We all have different circumstances so a blanket statement telling everyone that a Trust is no good, is just as incorrect and useless as saying it is the best thing since sliced bread.

A Trust does add a layer of complication to a portfolio, it can also add additional costs. But then again, having multiple investments also adds complication. As always you should not enter into such a structure without professional advice.
 
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