A Trust enables a person or company to own assets on behalf of other people.
The Trustee is the person that owns/controls the asset and the beneficiaries are the people for whom the asset is owned.
The three main Trust structures are:
· Unit Trust
The asset is split up into portions (units) and the
beneficiaries own these units, similar to a shareholding in a company.
· Family Discretionary Trust
The Trustee can use their discretion to distribute the income
and assets to the beneficiaries, allowing family members to take advantage of
· Hybrid Trusts
This sort of trust is a combination of a unit trust and
family discretionary trust, which allows beneficiaries to hold units in the
trust whilst giving the trustee the power to distribute income as they wish.
Take note of the following if you are considering buying a
property using the trust:
· If you own an investment property individually,
if you transfer it into a trust, you will need to pay stamp duty and you will
be liable for CGT.
If the trust makes a capital loss or a rental
loss on an investment property, the loss cannot be offset against any other
investment income and you won’t be able to use negative gearing.
The biggest benefits of buying an investment property
through your trust, is the asset protection aspect and tax benefits.
Also, each trust features a trust deed which outlines the
rules of the trust and what will happen to each beneficiary’s share of the
assets upon their death.
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Wednesday, 4 December 2019