trust timing question

[Jen]

I am looking at buying a property but haven't yet set up a structure for my investments.
From reading the forum, it appears that a hybrid discretionary trust may be the best vehicle.
Is it possible to buy the house in my name with "and/or nominee" as well so that I have time to set up the structure and then transfer the house without penalty? If that is possible, what time frame would I have to set the trust up? I'd imagine that it would be between signing the contract and settlement.
Thanks for any replies,
Jen

 

[NigelW]

Originally posted by Jen
I am looking at buying a property but haven't yet set up a structure for my investments.
From reading the forum, it appears that a hybrid discretionary trust may be the best vehicle.
Is it possible to buy the house in my name with "and/or nominee" as well so that I have time to set up the structure and then transfer the house without penalty? If that is possible, what time frame would I have to set the trust up? I'd imagine that it would be between signing the contract and settlement.
Thanks for any replies,
Jen

Jen

You should ask your lawyer or conveyancer about this.

The rules vary state to state. My suggestion is: get it all set up first.

It shouldn't take you more than 24 hours to buy a shelf company and get a trust established.

If you go to the various Office of State Revenue websites in the different states you should be able to dig up some revenue rulings or practice directions about the "or nominee" issue. Failing that call the OSR in the state where your property will be located and ask a hypothetical.

In NSW the belief that the "or nominee" thing works has been a long held misapprehension. The NSW OSR considers it a subsale with 2 lots of duty payable. there are some potential exceptions but you should talk to your lawyer about all this.

To shamelessly steal from Stephen Covey "start with the end in mind".

Good luck
N.

 

[Jen]

Thanks NigelW. Am I correct in thinking that I may have difficulty in finding a solicitor who can set up these particular trusts.i.e Not all solicitors are familiar with them?

 

[NigelW]

Originally posted by Jen
Thanks NigelW. Am I correct in thinking that I may have difficulty in finding a solicitor who can set up these particular trusts.i.e Not all solicitors are familiar with them?

I think that's a fair observation. To be honest, your accountant is probably more likely to understand setting up of a hybrid discretionary trust than a suburban solicitor who does conveyancing...but perhaps I'm talking down the profession.

There are some accountants who frequent the forum (the legendary Dale Gatherum-Goss and Nick Moustacas spring to mind) who could assist. You don't need to be in the same state for them to set things up for you - it just may speed the process.

An excellent tax lawyer (but again he's in NSW) is Kevin Munro.

Maybe the thing to do is ring the relevant professional bodies in your state and ask if there are any accredited specialist commercial lawyers they could give you the names of. Its probably on the CPA/Law Society etc web sites too...

Have fun
N.

 

[NickM]

Hi Jen

The trust must be in place prior to purchase to ensure you do not have any issues with the ATO at a later date.

The nominee clause only works if the trust was in existence at the time you signed the contract.

regards
Nick M