Purchase in Discretionary Trust

[Terryw]

Really? Are there restrictions based on your relationship? For example, if i use my own name + nominee clause and then decide I want the title in a company name, do I need to be a director of that company?

The rules vary between states and I am not sure exactly what the position is. But if the nominee is not in existence at the time of entering the contract the SRO could deem this to be a sub-sale and assess it on stamp duty twice. Sometimes there are concessions available for people nominating a trust or a company which the control, but not always.

 

[Ms Jade]

But if the nominee is not in existence at the time of entering the contract the SRO could deem this to be a sub-sale and assess it on stamp duty twice.

Nasty trap; but the reasoning does make sense.

 

[Mry]

And/or nominee shouldn't really be advised since it is very state specific.

I have been told that common trustees is not an issue unless the trusts are very similar (beneficiaries, terms), which could deem that both trusts are really one trust. So if one trust was a trading trust and the other was an investment trust that you intended to keep assets in, that would be a problem. A person with a claim against the trading trust may be able to exercise it against the investment trust.

I would suggest you speak to your accountant about this issue. The structure of your investment and financing and the names the loans will be in needs to be discussed first before you move forward. The questions you are asking worry me as the magnitude of what you are attempting to do really requires someone knowledgeable to help you.

 

[tubs]

If you haven't opened the bank account yet, you won't deposited the settlement.

Does this mean the trust has not been settled yet? And if not, could it screw up your strategy if you then nominate a trust that has not been settled at the time you nominate it?

 

[Terryw]

If you haven't opened the bank account yet, you won't deposited the settlement.

Does this mean the trust has not been settled yet? And if not, could it screw up your strategy if you then nominate a trust that has not been settled at the time you nominate it?

Do you mean the settled sum hasn't been deposited into a bank? The $10 or $20?

I don't think this would matter as all the trustee is required to do is to hold the settled sum, which doesn't necessarily mean held in a bank account.

 

[Ms Jade]

^Yes, I just did the trusty (sic) "Staple the $10 note to the deed" trick.

I would also like to agree with Mry's warning about seeking advice. My broker is overseas but called me on the weekend. He said that in Vic, the SRO is all over nomination clauses and in some cases they are claiming the double SD. This may not be just because the entity did not exist at the time of the sale, but also where you might nominate a company that you're already a director of (which or may not be a trustee co). Apparently the reasoning goes something along the lines of, "As a director of a company you're expected to know what you're doing. When you purchased you should have known what you were doing & what entity was purchasing." Surely this almost defeats the facility of having a nominee clause in the first place? Of course, as stamps are way down for the Vic Govt with the fall off in sales so they'll be looking to increase the take wherever they can.