Trusts: What do you want to know

Happy to do some proof reading and providing feedback and looking forward to gaining new insights. I always learn from both of you through your posts on SS.
 
Hi Terry_w,

Sign me up for a 1st edition. Have you got that portrait photo ready for the back cover?

I'd love to understand lending and starter funding in a trust. Everyone talks about getting funds out but I'd like to understand lending, gifts, in-kind considerations when dealing with trusts. How to use contracts or minutes to structure this process.
A solicitor gives me one answer, an accountant something completely different. Then the broker/bank chimes in.....

Should I have a loan agreement between myself and the trust when I lend the deposits & costs?
Should I use a master trust between myself and the DT?
Any negative gearing possible?

Cheers.
 
Should I have a loan agreement between myself and the trust when I lend the deposits & costs?

Yes, definitely. For 2 reasons -
1. You may want to get your money back
2. tax and deductibility of interest

Should I use a master trust between myself and the DT?

Please elaborate what you mean?

Any negative gearing possible?

Cheers.

Yes. a trust can negative gear like any other tax payer - including SMSF.
 
This is perfect timing.
We are just looking into setting up a trust now!
I would love heaps of info on the negative gearing when in a trust and how it becomes beneficial at a later stage (i.e positive cash stage); also a simple thing... Who is the best professional to get advice from? Our accountant has referred us to a financial adviser?
I'm interested in the proof reading- husband is a teacher, so I can get him to help out also!
 
Terry & Coastymike


Interested party here also as I am looking for more information on bloodline testamentary trusts to share with my elder batchelor brother as I believe that is what he needs to set up to achieve his wish that his hard earned money stays within the family bloodline.

Also the basic cost for accountant to audit and run per year? I believe this is a how long is a piece of string question. For example if you have XX amount of assets or YY amount of income then consider bloodline testamentary trust.


Good luck
Sheryn

PS. I also purchased Nick's book and found the book heavy going.
 
Also the basic cost for accountant to audit and run per year? I believe this is a how long is a piece of string question. For example if you have XX amount of assets or YY amount of income then consider bloodline testamentary trust.

Even if you're 20, single and healthy you should have provisions in your will to create testamentary trusts. Unless you plan on dying tomorrow, it almost doesn't matter how much in assets you have NOW. If you plan on investing, then you're likely to have a lot more assets when you die.
 
I am also more than happy to proof read. If it makes sense to me it makes sense to everyone. :confused:

What would be helpful? The copies of the most common basic trust deeds and examples of mistakes that people have made when setting trusts up.

Explain income streaming such a way that it is easy to understand. Maybe with example.

Explain the process how to amend / update the original deed without 'destroying' the trust and also the common mistakes made again in this area.
 
I don't think you can dumb down a trust deed to the point where a layman can understand it and yet it still works legally. Even a 'common, basic' trust deed needs some legal training to understand, and without some legal knowledge, explaining 'common mistakes' in light of the case law is difficult. A lot of the time the deed itself is perfectly fine but it doesn't do what you want it to do.

Simple example it names you as the named beneficiary, and the beneficiary group includes your branch of the family, but you wanted to distribute to your cousin. There's nothing inherently wrong with the deed itself, but you needed to 'know' what the beneficiary group does NOT include, and that either needs legal training to read the deed, or experience with trusts.

Perhaps a checklist for people when using trusts to give to their accountant / solicitor to fill in. Settlor? Named beneficiary? Is this person included? What happens in the case of child divorcing?

A quick reference and user manual for the trust deed itself, basically.
 
I'd really like to see:

1. Trusts and LAND TAX. Examples of different setups forecast ahead 20-30-40 years and the difference getting this right can make to your retirement cashflow. i.e. first few properties in each state in personal name, then DT, etc etc.

2. Trusts and lending. How trusts make it harder and other considerations, HDT's vs DT's vs Individual name.
 
I'd really like to see:

1. Trusts and LAND TAX. Examples of different setups forecast ahead 20-30-40 years and the difference getting this right can make to your retirement cashflow. i.e. first few properties in each state in personal name, then DT, etc etc.
This would have to be a state to state thing , especially in regards to trusts, as land tax laws differ from state to state.

But this can make a big difference to one's portfolio and would be very valuable to have included.
 
That reminds me of another question! (I'm sure anyone could answer this!)
If I own property in my personal name and am paying land tax on these, when I create a family trust, does my land tax assessment begin at $0 again?
 
That reminds me of another question! (I'm sure anyone could answer this!)
If I own property in my personal name and am paying land tax on these, when I create a family trust, does my land tax assessment begin at $0 again?

Depends on the state. In NSW = No
 
This would have to be a state to state thing , especially in regards to trusts, as land tax laws differ from state to state.

But this can make a big difference to one's portfolio and would be very valuable to have included.

Absolutely. After 40 years in Excel the difference can make a huge impact to your retirement cashflow, i.e. up to 25% of it! The maths are really scary, this is the tax that really sneaks up on you.

What would be very helpful would be to have an example of the most common end game for investors here that is structured optimately for Land Tax - say 10x '4 out of 10' properties around Australia.

Victoria - 2 in Individual names, 1 in a DT
NSW - 1 in Individual name, 2 in a DT
QLD - 1 in Individual name, 2 in a DT
WA - 1 in Individual name

(i.e. *generally speaking*, it makes senes for investors to use up the individual threshold first for a given state, then move to DTs, in my opinion).
 
I don't see land tax as a huge priority.

In the later stages, assuming you have children and grandchildren, and you might sell some properties, management of taxable income would be more important, surely?
 
Land tax can also very easily change a property which is positively geared to negative.

However I don't think that in NSW there's any advantage to having a property in a trust. There's no tax free threshold for a trust, where there is for an individual.

I don't know about other states. I'll leave that to Terry's book.
 
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