Settlement and Family Trust; How To?

[always_learning]

I will settle a property in 2 weeks. I will purchase and hold this property using our family trust, with my wife "Mrs Always Learning" as trustee.

The transfer of Land (Victoria) document (Section 45) has my Mrs Always Learning listed as the "transferee" without any reference to the fact she is purchasing asa trustee, eg. for the benfit of the "Always Learning Family Trust". If I look at the documentation it would appear that Mrs Always Learning will own the property personally. Thus I assume I need to create some followup documentation to prove that this property is part of the family trust. What needs to be done?

 

[DaleGG]

Hi

No, the trusts own records reflect that the purchase was in her capacity as trustee and not in her own right.

This is normal and is nothing to be concerned about.

Dale

Originally posted by always_learning
I will settle a property in 2 weeks. I will purchase and hold this property using our family trust, with my wife "Mrs Always Learning" as trustee.

The transfer of Land (Victoria) document (Section 45) has my Mrs Always Learning listed as the "transferee" without any reference to the fact she is purchasing asa trustee, eg. for the benfit of the "Always Learning Family Trust". If I look at the documentation it would appear that Mrs Always Learning will own the property personally. Thus I assume I need to create some followup documentation to prove that this property is part of the family trust. What needs to be done?

 

[always_learning]

Re: Re: Settlement and Family Trust; How To?

Originally posted by DaleGG
Hi

No, the trusts own records reflect that the purchase was in her capacity as trustee and not in her own right.

This is normal and is nothing to be concerned about.

Dale

So all I need to do is I should ask my accountant to help create some type of meeting minutes / records for my trust confirming the purchase of this property into the trust.

 

[DaleGG]

Re: Re: Re: Settlement and Family Trust; How To?

Perfect!

Dale

Originally posted by always_learning
So all I need to do is I should ask my accountant to help create some type of meeting minutes / records for my trust confirming the purchase of this property into the trust.

 

[always_learning]

Sounds easy enough.
Sorry to ask some more dumb question then:

Question 1:
If the only record of the fact that the property is in "Always Learning Family Trust" in contained in the minutes of the trust, how the hell does "bigbrother" know that I should pay land tax on this asset? ie Bigbrother's computer system would sprout reports that the asset is held by Mrs Always Learning rather than held by Mrs Always Learning on behalf and for benefit of the trust.


Question 2:
I am financing this purchase partly from a Line of Credit (LOC) secured against existing investment properties owned personally.

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Now: 1 personal property value $10K, LOC $8K, low debt means low interest means postive cash flow subject to tax.

Personal Property A: Value $10K, LOC: $8K,Available LOC: $8K. +ve cashflow

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Future: Buy $10K IP holding in Descretionary Family Trust using $4K from the LOC held against property A:

Personal Property A: Value $10K, LOC $8K,Available:$4K.
Trust Property B: Value $10K, LOC $8K,Available:$4K.

From the tax office point of view the interest on the $4K I borrowed to from the LOC on my personal property A, to make a $4K deposit on the Trust Property B deductable from my personal tax? Now from my point of view I am using my existing LOC to purchase an income producing asset for my and my families benifit, thus I should be able to claim the interest cost against income. However the tax office may see it more as a gift to the trust, not for my personal income producing purpose and thus disallow any interest deductions.

 

[Owen]

My accountant has always said to buy IP's in my personal name as the implication is that I am doing so as a director of a trustee company for my discresionary trust. This is confirmed by the accounting and the tax returns. I also have a minuted item in my trust documents.

One of the reasons he suggested this is that in 30 years time if you want to wind up the trust and transfer the asset to your own name then it is a matter of a title address change and not a name change, therefore, no stamp duty!!

Now this sound a bit dodgy but he assures me he has been doing this for 25 years for many clients and never been questioned on it. Why you would want to wind up a trust I don't know but it's an interesting idea.

Regardless, buying in your own name but holding in a trust is OK as Dale confirmed.

 

[Patosan]

If there was a legal challenge due to litigation would mere Co minutes convince a court that the IP does indeed belong to the trust and not the individual ?

How about IP held prior to the establishment of the trust ?
Can minutes show that the IP is being transfered into the trust w/o title name change ?
This would be avoiding stamp duty on the way in ?
Can this float ?

 

[Patosan]

In addition ... (I hate always thinking of extra questions after !)

If for legal reasons the Co trustee needed to be replaced and the IP are in the name of an individual director, is this a problem then ?

I guess it's a bigger situation if the specific individual is not to be a director in the new Co trustee ?

If this practice is kosha then why on earth would anyone actually put the Co trustee name ATF xxx Trust on the contract documents / title ?

I was literally just about to have an IP valued so that I could transfer (gift) it into our Trust ... and pay the relevant stamp duty, prior to development plans going to council. So I'm REALLY interested in the outcome of this particular thread !

 

[XBenX]

what would stop someone altering the trust documents after the fact (if you already had a trust formed at the time of purchase)

Eg Jim has a trust "Jims Trust" Jim buys an IP in his own name...
he then gets advice that it should be in the trust..... he alters the truat records to show that he was buying the IP for the trust ?

Certainly not ethical, yet it seems like a rather large loophole (unless there is something im missing)

 

[DaleGG]

Hi

The actual date of establishment of the trust would be the missing link here. If the Ip was bought, for example, 1st Feb 2003 and the trust documents say that the trust ws created on 1st March 2003 then the stamp duty office could charge stamp duty again . . . then, the tax office could look at CGT on the sale of the IP from Jim to the trust.

To be honest, it is not worth the risk playing with these sort of things.

Dale

 

[gr137]

Dale, I am interested in your thoughts on Owens set up. Sounds like he has a corporate trustee (he as director) but buying properties in his own name on the basis that maybe one day he will close the trust down and wont have to transfer ownership - this has got to be risky from an asset protection point of view - doesn't it??

 

[XBenX]

Originally posted by XBenX
(if you already had a trust formed at the time of purchase)

so assuming above is the case its possible

not that anyone would recommend it or anything