Number of Trusts

[Patosan]

I had been thinking of setting up a new trust for future IP purchases, since some time ago there was discussion on the extra protection of having multiple cells, trusts or whatever. However recently I'm feeling since the beneficiaries, Co. trustee directors and shareholders would be the same there may actually be little or no extra protection, while bringing extra cost and care, I may not bother.

There was also a rather small discussion on the merits of using seperate trusts for shares and IP. So I'm curious about the number of trusts used by forumites. I've kept it fairly simple, asking on the prime purpose of having multiple trusts for those that do have them.

Thanks in advance guys.

 

[Terryw]

Hi Pato

Having different trusts can help asset protection as if one trust is sued, the other trusts assets could be harder to get at.

There are other implications besides asset protection too. One involves losses. If one of your properties has a loss, you may not want to use that loss straight away so having things in different trusts give flexibility in when you will use up the loss.

Another aspect is estate planning. You may want to leave one property to one child and another to a second child. This is easier if they are in different trusts.

 

[ladobs]

Losing franking credits

Hi all

Newbie here, so hope someone may have the answer to my queries (sorry if they are a bit dumb!):

1) Discretionary trust only has a geared portfolio of fully franked shares. Interest is greater than sum of dividends and franking credits in fin year. Am I correct that the credits will be reducing the losses, which can be carried forward. And the actual franking credits can't be carried forward, so are basically lost.

2) Assuming same as 1 but trust also has business income. If the overall trust position is tax profit for trust, can this be distributed along with all of franking credits to beneficiaries.

I've heard it is wise to have a separate trust for -ve geared investment property and non-geared shares, so am thinking that scenarion 2 is a no?

Thanks

 

[Mry]

ladobs, your assumptions are correct, though structuring is always particular to each person's circumstance.

 

[ianvestor]

I put "Multiple for different trustees" although I still control all of them. The trustees are different companies that I am the sole director and shareholder of.

In hindsight I should have put "Multiple for different purposes" as the reasons for having more than one trust are varied (Mainly asset protection).