Trust setup costs - am I missing something?

johnnyb

johnnyb

Hi All,

I've recently gone through the process of setting up a family discretionary trust. I've got a vague memory of hearing people quote figures of a couple of thousand dollars to set up their trust, and I just read "Trust Magic" that one of the disadvantages of using a trust is the $2000-$2500 it costs to establish.

I feel like something must have gone wrong as all I've paid is about $200 to get the trust deeds drawn up. I have yet to receive a bill from my accountant for her role in helping me set it up, but I'm pretty sure she isn't going to charge me $2000 for a few hours work. So what am I missing?

John.
 
Our trust and company structure cost < $2000. The break down of costs included things like:

Writing of trust deed.
Registration of trust.
Registration of company.

$200 seems to be a little low. You might want to verify that it's all registered properly. Also consider that not all trusts are created equal. It all comes down to the wording of the deed which states the manner in which the trust is used, and how well it will hold itself up legally.
 
I think there's a difference between a trust with a personal trustee and a trust with a company trustee.

There are advantages for setting up with a company trustee- but you have all the extra costs of setting up and running a company.

PT Bear's trust obviously included a company, for instance.

There can be enormous cost differences between accountants as well.
 
Originally posted by johnnyb
Hi All,

I've recently gone through the process of setting up a family discretionary trust. I've got a vague memory of hearing people quote figures of a couple of thousand dollars to set up their trust, and I just read "Trust Magic" that one of the disadvantages of using a trust is the $2000-$2500 it costs to establish.

I feel like something must have gone wrong as all I've paid is about $200 to get the trust deeds drawn up. I have yet to receive a bill from my accountant for her role in helping me set it up, but I'm pretty sure she isn't going to charge me $2000 for a few hours work. So what am I missing?

John.
Click to expand...


Trusts are very cheap to establish.. if you have a set of Trust Deeds you can establish one yourself for $10.

Setting up a corporate trustee is not so cheap as it costs around $1200 to set up a brand new Pty Ltd company.

So $2000 would be about on the mark for an Accountant/Solicitor to register a new Pty Ltd, author (copy) a set of Trust Deeds, get them stamped and wrap it up in a nice folder..

Duncan.
 
Thanks for those replies, that makes things much clearer. The difference must be that we have not used a company trustee, but I will follow up with my accountant anyway.
 
You may also want to check up on the wording of the benificiaries of the trust. The three categories are usually along the lines of:

Category A) You, your partner, your children and anyone else who you wish to potentially benifit from the trust.

Category B) Any future children, spouses etc.

Category C) Companies which you want to potentially benifit from the trust.

Specifically, the way category C is worded will determine how you can set up a trust - company relationship if you which to do so in the future.

In general, the wording of the trust deed will have an effect on what you can do with the trust. When it comes to how much your accountant charges you, this is what you pay for.
 
Quick question - If you already have a company set up would it be prudent to use it as trustee for trust or would you be required to use another company

Kim
 
Dear Kim,

It depends on whether you have done any business transactions through it. You need to change the ABN as you will now be using the trusts ABN.

There is no reason why you can't use it. (Save yourself the setup costs etc depending on your reasons for having it.) I would suggest that now is the right time to get ready so that you use the trusts ABN for the new financial year and will be a lot easier from an accounting/bookkeeping point of view.

Cheers,

Sunstone.
 
Sunstone
The company is already trustee for our super fund and also leases a business from our partnership.
Not quite sure what you mean by the need to change ABN

Kim
 
Dear Kim,

Not quite sure what you mean by the need to change ABN
Click to expand...

The ABN you have for a company on your letterhead is different when you use it as the trustee for the trust. Therefore you would have to change on your letterhead when you do this.

The company is already trustee for our super fund and also leases a business from our partnership.
Click to expand...

Possibly but again depending on the level of business through it your accountant may 1) Argue that it is safer for your assets to be in a trust with a different trustee and 2) The costs of setting up/maintaining are worthwhile to keep the activities separate.

Dale or Nick on this forum may be able to give some more feedback on this but would suggest that you talk with your accountant (even though this time of the year they should be busy.)

Cheers,

Sunstone.
 
Hi Kim

I would be reluctant to use the same company for a business structure and for your investments.

Legally it can do it and provided all your records are kept tidy then it cana work.

I prefer to keep them separate to ensure the investments are isolated from the business as much as possible.

NickM
 
The reason behind this is security. If someone sues the trust, legally all they can sue is the trustee. The trust has an arrangement with the trustee that the trust will cover all the trustee's debt in running the trust, for as along as the trustee _is_ the trustee.

So when litigation rears its head, the trust sacks the trustee and sets up another one.

This means that only the assets held by the ex-trustee are still vunerable. This is why you set it up as a $2 company. It has no assets, so there is no point in suing.

OTOH, if the (now) ex-trustee also runs a business, the litigation can still go after those assets. Part of your asset base is still vunerable.

Don't do it! Why go to all the effort of protecting your assests, and still leave half of them venrable. There's no point. Protect them all. Set up another trustee company.

Jas
 
Bugger me (metaphorically speaking)!

I thought it was enough to set up a simple family trust, with my wife and I as trustees. I think I need to do some more reading.

John.
 
I recently employed Gatherum-Goss & Associates to set up a structure for me which consisted of:

- a Pty Ltd to act as corporate trustee,
- a hybrid trust, and
- a discretionary trust.

The total bill was $3,380...ouch
 
Accountant and Mortgage Broker

Hi forum ! :)
I noticed the comment about Gatherum-Goss so thought I would share my experience.

Irecently bit the bullet and set up a Hybrid Discretionary trust with a Coporate Trustee with Dale and Sharon at Gatherum-Goss ... cost was $2,400. I also bought the Tax Battles and Trust Magic manuals which I highly recommend, as would probably anyone who has them.

The service was exemplary, the advice always helpful. There was one drama where the solicitor involved made a typo and we had to start all over again, but we weren't in a hurry as all the deals I kept trying to do in the name of my not-quite-formed trust kept falling through anyway.

Regardless, the point of my post is, if you're like me, and a bit of a newbie to the accounting and structuring side, but love your property deals and want to go with someone with expertise who doesn't dump you like a hot spud when they have your cash, or charge like wounded bulls for all additional advice, then I highly recommend Gatherum-Goss & Assoc. No I'm not on commission :)

And while I'm at it, Rolf at ASAP Financial (mortgage broker) who I also found through a recommendation from these forums is also an absolute champion.

Feeling rather more confident in my finances now !
TryHard !
 
Originally posted by Jas
The reason behind this is security. If someone sues the trust, legally all they can sue is the trustee. The trust has an arrangement with the trustee that the trust will cover all the trustee's debt in running the trust, for as along as the trustee _is_ the trustee.

So when litigation rears its head, the trust sacks the trustee and sets up another one.

This means that only the assets held by the ex-trustee are still vunerable. This is why you set it up as a $2 company. It has no assets, so there is no point in suing.

OTOH, if the (now) ex-trustee also runs a business, the litigation can still go after those assets. Part of your asset base is still vunerable.

Don't do it! Why go to all the effort of protecting your assests, and still leave half of them venrable. There's no point. Protect them all. Set up another trustee company.

Jas
Click to expand...

Is this really correct?

If the trustee is a person, and the person does a bad-thing then all that is available to sue is the property that the trustee personally owns, not the assets of the trust. Why because trustee doesnt legally own the assets of the trust the are in effect just minding/babysitting them right?

The only what to loose the assets is for the trust itself to do something bad like forget to pay the bank, or not insure the property against liablity and the tenant trips on a loose floor board and break his/her leg.

Again I am now confused
 
why the diff ?

I'm alittle confused btn the setups here, if capitalist and Tryhard setup the same trust structures both with Dale, why is one $3380 and the other $2400.

Capitalist listed a Hybrid trust and a Discretionary Trust whereas Tryhard listed it as a Hybrid Discretionary Trust.
Aren't these the same??

Can someone explain a bit more.

Thanks Chris
 
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