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Something that might be interesting for your book.
I have an investment partner. We buy an old house on a big block 50/50. We knock over the old house and build 2. At the end, I own one and my investment partner owns the other without paying GST and capital gains tax.
As far as I know this is done with a bare trust and a partition agreement. But I think the trust is set up before the land is purchased. It seems the order is:
1. set up the trust
2. buy the land
3. draft a partition agreement
4. build the houses
5. partition the land
6. dissolve the trust?
It seems that a number of people want to do this so it would be good if your book could explain the bare trust part of the equation.
source: http://www.13wentworthselbornechambers.com.au/barlinpdfs/partitioninglandaugust2010.pdf
Can't wait until this book is released, I'm definitely in for a copy
As a PI newbie/lurker, I've been reading Terry_w's posts for a while now and it's been quite an education to date.
I'm more interested in the "bare trust" side. How do I purchase a property in a bare trust? This is the part in the document I linked to:This a partioning agreement - where each party agrees to own a specific part of the land from the start. When it is sub-divided there is no change in beneficial ownership as each person gets their portion. It is only the titles that are changed.
Won't be covering it in the book as it is very complex and laws vary state to state. Might just give it a mention though.
I'm more interested in the "bare trust" side. How do I purchase a property in a bare trust? This is the part in the document I linked to:
"If the co-owners enter into a deed whereby they acknowledge that the land is to be held on bare trust for the benefit of each other in accordance with the proposed plan of subdivision each co-owner will hold their interest in the other co-owners post-partition lot on bare trust for that other co-owner."
I was hoping you would cover this in your book... although not the bit about the clothingYou remove all clothing when you sign the transfer document.
A bare trust is where A holds property for B absolutely. Like all trusts associated with land it must be in writing.
It is like a custodian trust for a SMSF - this is a bare trust, although some argue it is not really!
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.
I'd also like to know whether there is an equivalent to a "bare trust", in QLD? I hear a lot about them on SS but they only seem to be in (some) other states?
Bare trusts can exist everywhere. One example is where A dies and leaves his house to his 2 year old son. A trustee will usually be on title until that son reaches 18 and then titles can change.
OK, so that to me sounds like a discretionary trust. Is a bare trust something different again, or is it just another term used to describe a disc. trust?
I am aware of unit trusts, and discretionary trusts. Are there any others?
I know discretionary trusts were/could also be called family trusts in the past (ie family discretionary trust) but there are/were no actual differences to a "discretionary trust", in my understanding. Is that right?
A book is a tool and a tool is only as good as the person using the tool. I would use such a book to educate myself before seeking professional advice. The reason is that I need to understand, to some extent, the advice I am being given. Years ago, before I bought my first IP, I saw a very reputable tax accountant in Perth. He was a bit of a smarty and I couldn't really talk to him. I was lucky to have studied tax accounting at uni so I knew his "advice" did not suit what I was trying to achieve. I followed up with a contact of a person I trust, who is also a very good tax accountant. Tax accountant 2 confirmed my fears that acc 1 gave advice that did not suit my situation. Years later it turns out acc 2 was on the money and I saved a lot by following his advice... because I could talk to him and understand what his suggestions meant to me.Thats going to be your challenge Terry. I have found most prospective clients know a little about trusts but ask me cause they seek a solution. This is like a medical issue. You cant possibly learn it all - Its faster and safer to see a specialist. And I cant recall seeing a cancer specialst write a DIY guide.
If someone decides to read Terry's book and DIY and makes a mess, that's not the fault of the book, it's the fault of the person using the book. If someone reads the book, gets professional advice and is able to talk to their adviser and figure out the best structure for what they are trying to do, then that is brilliant.