Loaning Vs Gifting To Family Trust?

[Young_Investing]

G'day All

Just wanted to ask what the difference between Loaning and Gifting to a DFT?

I don't totally understand both concepts, can anybody give any pointers?

I'm trying to decide as i have 50K in savings and want to get active!

Any help would be greatly appreciated!

Cheers

James

 

[GreatPig]

The primary difference I see is that if you lend the money, it's still your money, so there's no asset protection for it. If you gift it, it's no longer your money, so it's protected (provided you're not about to get sued already or get divorced). However, then it's no longer your money, so you can't just go and spend it as you would your own (which is probably a good thing).

GP

 

[MattR]

However, if you are the appointor, trustee and a beneficiary of the trust, asset protection may not help you.

 

[Young_Investing]

Good Points!

Thanks guys, the 50K is purely for investing..... I have a fair bit of money coming in atm and am trying to save like mad. I live on bread and water so having this money sit around is truly a waste.

So as far as i see it.......

Loaning = DFT is in debt to me for 50K and pays interest also? (No asset Protection)

Gifting = DFT owns 50k to invest with, (since cash is owned by DFT it is protected?)

Anybody know of any sites? books? etc that might explain my question a little further?

Thankyou in advance

James

 

[GreatPig]

Loaning = DFT is in debt to me for 50K and pays interest also?

By my understanding, if you're just lending it your personal after-tax money, then the trust doesn't have to pay you any interest. You're free to do whatever you like with your own after-tax funds.

For resources on trusts, the two main ones I know of are Trust Magic by Dale Gatherum-Goss and Nick Renton's book on Family Trusts. Both appear to have been updated in 2007.

Dale's book is more expensive, but much lighter reading. Renton's book is very dry.

GP

 

[twodogs]

Good Points!

Anybody know of any sites? books? etc that might explain my question a little further?

James

Sites:
http://www.strategicwealthmanagement.com.au/
http://www.investorone.com.au/

Good book:

http://www.trustmagic.com.au/index.php?act=viewDoc&docId=6

 

[Young_Investing]

thanks guys!

Will have a look at those books/web sites and see how i fair!

Cheers

James

 

[callum.newton]

Something else to consider - a loan to a trust will have implications on your allowance if you are on ANY form of government assistance I.e Aus-study. Since you have saved 50K though, I would be guessing that it doesn't apply to you...

 

[Young_Investing]

Cheers callum.newton

Great point! your right i'm not on any aus-study, but really good to know if anything were to come up of that nature!

Something i didnt know!

Thanks

James