Hybrid trusts - set up costs

[newtome]

I have "lurked" this forum for some time - so much great info. So motivating to hear of others successes etc.

There have been numerous posts about Hybrid Trusts - it seems that others here feel these are the best way to go. We have just made an offer on our 3rd ip, and have been looking into a better structure - other two are in our own names. Spoke to Accountant and Broker about Hybrid Trusts and neither knew of them.

Can someone please give me an indication of
a) approx set up cost
b) annual costs

Any contact details of Accountant in Perth who knows anything about these?
Does it have to be your usual Accountant to set it up and then to maintain it, or can you find someone who knows about them to set it up, and then have your usual accountant handle it?

Thanks

 

[sunnywan]

Hybrid Trusts

My Hybrid Trust and setup of a Company to act as trustee, together cost me less than $2k to setup. I used a different accountant, who I felt had a better knowledge of the product. I used an accountant in Melbourne to set mine up, and I live in Sydney!

If you've just made an offer, you better be quick with the trust setup (takes about 2 days, but you will also need to get it stamped by OSR), as you need to put the trust on the front page of contract.

I used my own name on the front page of contract initially, which I later decided I wanted to change to the trust prior to settlement. The vendor was relunctant to agree to my changes, and it wasn't until I applied alot of persuation did he agree.

 

[john doe]

Hi sunnywan,

My accountant recently tried to dissuade me from using a hybrid trust (and wanted me to go for a discretionary trust instead) by saying that hybrid trusts cost a lot more to run than a normal family discretionary trust. Do you know if this is true???

Cheers

John

 

[geoffw]

I suspect that is true.

But if you have a negatively geared property, you won't be able to gain the benefits of the neg gearing with a family trust (well, I think you can carry the losses forward).

I suspect the cost of the hybrid trust will be worth the benefits of tax deductions to uyourself.

If it's a positively geared property, a family trust may be the way to go.

 

[StevenO]

newtome,

My hybrid trust was set up by NickM mid last year and cost $1200 back then (this included GST and stamp duty). I haven't used a corporate trustee though.

My usual accountant told me it should only cost a few hundred dollars to complete the trust's end of year tax return and financial statements.

Regards,

Steven.

 

[newtome]

Thanks for sharing details....

I'll have to look into this more asap.

How have you found the banks look on these arrangements?
Are the lending criteria eg dsr the same?

Thanks

 

[sunnywan]

Originally posted by newtome
Thanks for sharing details....

I'll have to look into this more asap.

How have you found the banks look on these arrangements?
Are the lending criteria eg dsr the same?

Thanks

With my purchase using my Hybrid Trust, I took the loan under my own name - so that I could buy the units in the trust, so the trust could them go and purchase the property. As far as I am aware, the lending critiera was not any different just because the purchaser of the property was the trust. However, expect the whole approval process to take abit longer, as the bank will need to review the details of the trust.

 

[sunnywan]

Originally posted by john doe
Hi sunnywan,

My accountant recently tried to dissuade me from using a hybrid trust (and wanted me to go for a discretionary trust instead) by saying that hybrid trusts cost a lot more to run than a normal family discretionary trust. Do you know if this is true???

Cheers

John

As far as I am aware, my understanding is the same as Stephen shared - in that after setup costs, it should only cost a few hundred dollars each year to keep running. HOWEVER, this is the first year I am using a Hybrid, and as such have not filed a return yet.