Trusts: What do you want to know

Terry_w

Terry_w

Hi Members

I am currently writing a book about trusts and investing, focusing on property. I am covering everything that I think is important or should be known by investors, but am bound to miss something that someone knew to trusts would like to know.

So if there is anything you would like to know about trusts but were to afraid to ask please let me know.
 
Your thoughts on legislative/case law trends in the future? ie. Are they trying to close off tax minimisation strategies? Asset protection? Other things I haven't even thought of?
 
Terry_w said:
I am currently writing a book about trusts and investing, focusing on property.
Click to expand...
That would be awesome. I will buy one just because I already learnt a lot from your posts.


Terry_w said:
So if there is anything you would like to know about trusts but were to afraid to ask please let me know.
Click to expand...
1. Simplest trust structure for a mum & dad property investor who can't make grand parents as 'Directors'!

2. How banks treat mortgages for trusts (compared to personal). Loss of 'asset protection' by giving personal guarantees.

3. How assets under trust can be tax effectively passed on to kids. How to protect assets against their future partners.
 
I recall being told by a family law specialist that the assets held in the family trust left from the parents and looked after by the adult children were not able to be "got at" during a divorce of one of those adult children, but that the amount that would have come from the personal assets of the marriage would go more in the favour of the one not involved in the trust, ie. it didn't really make much difference. That probably had to do with the amounts in the trust in comparison with the assets of the marriage of the particular marriage being discussed.

Things never progress past this initial consultation so I don't know what would have happened had it progressed to a separation.

I guess if someone managed $10M in a family trust and had personal assets it wouldn't matter if he gave up all of his personal assets to the ex.

Does this sound right?
 
wylie said:
I recall being told by a family law specialist that the assets held in the family trust left from the parents and looked after by the adult children were not able to be "got at" during a divorce of one of those adult children, but that the amount that would have come from the personal assets of the marriage would go more in the favour of the one not involved in the trust, ie. it didn't really make much difference. That probably had to do with the amounts in the trust in comparison with the assets of the marriage of the particular marriage being discussed.

Things never progress past this initial consultation so I don't know what would have happened had it progressed to a separation.

I guess if someone managed $10M in a family trust and had personal assets it wouldn't matter if he gave up all of his personal assets to the ex.

Does this sound right?
Click to expand...

My understanding is:

1) Family Courts see through Trusts, doesn't really matter to them how you own assets. You still divvy them up in the case of a split.

2) They're not available to the adult children though as they're just beneficiaries. Beneficiaries have 0 entitlement as the trust can exercise its discretion in who it distributes to.
 
Terry_w said:
Hi Members

I am currently writing a book about trusts and investing, focusing on property. I am covering everything that I think is important or should be known by investors, but am bound to miss something that someone knew to trusts would like to know.

So if there is anything you would like to know about trusts but were to afraid to ask please let me know.
Click to expand...

I'd like to know more about creative uses and examples / case studies where a trust has been useful.
 
dtraeger said:
My understanding is:

1) Family Courts see through Trusts, doesn't really matter to them how you own assets. You still divvy them up in the case of a split.

2) They're not available to the adult children though as they're just beneficiaries. Beneficiaries have 0 entitlement as the trust can exercise its discretion in who it distributes to.
Click to expand...

Sorry if I confused you, the adult children are the people who manage the trust which was initially set up by their parents, now gone.

There are family members (spouses of the adult children and their children) to distribute to and who are beneficiaries.

In the event of a marriage split for the adult children now in charge of the trust, this is the situation where the family court would look at all assets, and not exclude the trust assets (according to the lawyer).
 
devank said:
Are these 'adult children' are trustees or directors of a trustee company?
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I'm embarrassed to say that I don't know what the titles are. I glaze over when all the terms come out and just ask "what am I signing Radar?" :D

I know there are "shares", there is a company and I think I'm a director but really, I just don't understand it, no matter how many times I've had it explained to me. My strengths lie in different areas :eek:.

The trust was set up by my mother. When she passed away, it came to us via her will, and each of us has wills passing control to our two oldest children.

Thankfully one of us understands it all, and that ain't me. Thankfully, I'd trust my brother with my life, or I'd have to get more of a handle on it.
 
Family law is a complex area, and not an area I practice in.

My understanding is that a trust could be 'attacked' several ways under a family law dispute.

Some include
1 the courts powers to make orders against third parties such as trustees
2. The court's powers to see the trust as a financial resource of one of the parties to a marriage
3. If the trust assets have been built up during the marriage they could be marital assets. So there may be less chance of this occuring if they were built up by the parents during their life times and the control of the trust passed on. But the trust could still be 'attacked'

There is also the question of Testamentary discretionary trusts - these by definition won't involve assets of the marriage as the assets of this trust come from the deceased - in the initial period anyway.

There are several cases on these and it seems that testamentary trusts do offer some protection, but there are the odd situations where the trust was successfully attacked.
 
Is the testamentary trust some thing to do with the blood-line?

Someone was talking about how it can be useful if you are trying to look after your own kids. Say you die so all assets goes to your partner. Say he/she marries again and dies. Your children may end up with nothing (I'm sure there will be ways to fight this). This 'blood-line' thing makes sure the assets can be only passed on to your blood-line only. So the future partner of your partner doesn't get your portion. I could be talking total non-sense here!
 
devank said:
Is the testamentary trust some thing to do with the blood-line?

Someone was talking about how it can be useful if you are trying to look after your own kids. Say you die so all assets goes to your partner. Say he/she marries again and dies. Your children may end up with nothing (I'm sure there will be ways to fight this). This 'blood-line' thing makes sure the assets can be only passed on to your blood-line only. So the future partner of your partner doesn't get your portion. I could be talking total non-sense here!
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A testamentary trust (TT) is any trust set up under a will. If the beneficiaries were restricted to blood relatives then it would be a so called bloodline trust.

Using a TT in your will is good as your family will get all the usual benefits of a trust with added tax benefits (minor children taxed as adults and get the $20k tax free threshold).

It will also protect children from gold digging spouses. Not to mention your spouses new spouse after you are dead (you can't expect him or her to spend their life mounring your death can you?)

Every will should have one (almost) and everyone should have a will.
 
- the effect of changing trustees
- vesting from the trust
- grouping of family trusts, test individuals etc
- treatment of carry forward tax losses under various scenarios
 
It was quite a few years ago now that Dale Gatherum Goss brought out his book on trusts. I found it very useful at the time, and quite an eye opener.

However there's a lot which has happened since, with things like unit trusts, property investor trusts and the like coming into prominence.

It would be good to be able to understand some of these a bit more. Or even to understand them a bit.
 
Hopefully your book will be along the lines of"Trust Magic" Terry, I found the Nick Renton (RIP) equivalent heavy going....
 
How about some info on setting up a trust for a minor. I wish to setup a trust to buy shares for my 5 year old daughter which passes control to her when she turns 25. I prefer to do this as cheaply as possible so it does not eat up all her account.
 
Terry_w said:
Hi Members

I am currently writing a book about trusts and investing, focusing on property. I am covering everything that I think is important or should be known by investors, but am bound to miss something that someone knew to trusts would like to know.

So if there is anything you would like to know about trusts but were to afraid to ask please let me know.
Click to expand...

Hope you have an editor!

:p ;)


pinkboy:cool:
 
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