Protecting Assets through Trusts
I was recently asked by a client whether he should protect his assets using a trust. My answer was as follows.
There are many pros and cons and you are best having an appointment for an issue like this. A legal advisor can explain trusts but they will not be able to help much with tax planning issues. We establish trusts regularly for clients. Once established and structured correctly for tax purposes then your solicitor can arrange the property transfers.
In order to maximise tax efficiency we need to consider;
1) Which properties to transfer
2) How to structure the finance for maximum tax efficiency
3) Which trust to use, Unit, Discretionary or Hybrid
4) The negative gearing issues as the loss can get locked in the trust if not correctly structured
5) Who is the applicant for the finance – the Trust or yourself and this depends on type of trust and the negative gearing issues
6) Other issues are also Capital Gain Tax on the transfer and on later sales
7) The CGT effect on your Principal Place of Residence (PPOR)
8) And if that’s not enough, there are also Land Tax issues and these vary from state to state
In others words, you need an appointment to work through it all.