Trust w/ Personal Trustee vs Company Trustee

[Kevmeister]

It would seem that my initial objection to using a trust was because I was expecting the property we purchase to be negatively geared, and hence I could not offset IP losses against my income if the IP was in a trust... If I have been diligently following and absorbing the info on these forums I believe a Hybrid Trust can achieve this?

If I also understand correctly, a trust lets income be distributed to any beneficiary at will, so presumably this helps keep income directed to the lowest income earner, if appropriate for tax reasons? Is this correct?

I looked at the Chris Batten website and it appears there is a Hybrid Unit Trust and a Hybrid Discretionary Trust. What's the difference? And which is appropriate to my situation above?

This leads me to my main question. Are there any differences in the actual "trust" itself depending on whether the Trustee is an individual or a Company?

I assume the Trust-Deed is the "be all and end all" as far as what the Trust is allowed to do, so would that be the same in either case (ie. individual or corp Trustee).

I guess the crux of the matter is that having a Trust *and* Company Trustee is probably excessive (in money and otherwise) for me to contemplate, but a Trust with individual Trustee (eg. me or my wife) is more achievable financially (we are yet to buy our first IP).

Is Dale's Tax Battles book the appropriate book to get a better understanding of Trusts?

 

[DaleGG]

Hi Kevin

Yes, a hybrid trust should allow you to have the short term benefits of negative gearing as well all of the longer term benefits that a trust normally allows.

From what little you mentioned, a hybrid discretionary trust would be more suitable than a hybrid unit trust.

You can have either a company or an individual as trustee, however, for asset protection purposes it is much better to go with the company.

Have you read Nick Renton's book? He talks about trusts and Chris Batten's structure book is well worth buying if you would like more information about the hybrid trust and why they are worth using.

Have fun

Dale

 

[gridcap]

Dale
I bought your tax book recently - very helpful.
ordered chris battens
but where do i go to find nick rentons book?

GR

 

[geoffw]

Dale undersells himself.

While his manual does not cover hybrid trusts, it does cover clearly and concisely what trusts are about, and why one should be used.

And there’s more. It has a good coverage of accounting matters to do with IPs, and what sort of tax treatment is applicable. (including a few rather novel, but legitimate company tax deductions).

Hybrid trusts are a new animal. I gather they are not covered in the manual because Dale has been spending a lot of time coming to terms with them, and feeling comfortable with them. If Dale is comfortable with them, then go for them.

A standard trust has suited myself well for a slightly positive geared property. But I strongly suspect the big benefits will be in the future when the property becomes strongly cash flow positive.

 

[DaleGG]

Originally posted by gridcap
where do i go to find nick rentons book?

GR

Hi

It is available from most good book stores and from API's business mall at www.businessmall.com.au

I hear that it is hard going, but, worthwhile. I must admit to never having read the book though.

Dale

 

[raoul]

I hear that it is hard going, but, worthwhile. I must admit to never having read the book though.

I can vouch for the bit about hard going! I recently bought Renton's book at Dymocks (I think) in an attempt to understand more about trusts.

Be careful - a 2nd edition has just been released so make sure you don't buy the older one which was written before GST befell us.

The book is a hard slog. I think it would be of greater help to accountants and solicitors, etc, but I'm having trouble understanding it fully. I guess I'm the sort of person that understands by looking at examples. I had hoped to find examples of real-life situations that I could compare to me and my family to see whether further investigation is warranted. However, I'm only about a third of the way through it and have yet to find an example.

I guess that will teach me for being tight and not springing for Dale's $99 report!

Hopefully, by perusing past forum quotes, reading Renton's book and probably buying Dales, I will eventually reach a point where I understand trusts enough. At the moment, my brain is swirling with questions.

cheers

raoul