Home – New Forums Starting your journey Structuring Mistakes Reply To: Structuring Mistakes

  • Total posts: 450

Note Quite

A discretionary trust cannot own another discretionary trust, it can be a beneficiary of another trust though.

It is also not as simple as transferring to a trust, you are effectively selling it to the trust and the trust is buying it from you so stamp duty and CGT payable.

One option is to gift all you equity to a trust that never does anything other than lend money to your other entities. It will then lend money, by way of secured loan to a property trust to buy a property (second mortgage) or a business trust secured by some other form of security. These sorts of structures have costs and can cause issues with financiers, but can also be an outstanding form of insurance so to speak.

But you might be best to use a unit trust in some instances or a company or a partnership of discretionary trusts or a combination of. I have a PDF I use for asset protection diagrams but is too big to link here. PM me your email and I will send it to you.

I have a client who has gone through liquidation and is personalyl bankrupt but is still a beneficiary of a number of well off trusts. One of these very generous trust s bought his house off him and now rents it back to him at market rates, but at least he didn’t have to move. Another entity nets about $10k a month and this entity may decide to distribute money to him once he comes out of bankruptcy. His son is generously supporting him within the confines of bankruptcy at present and is lending him a car. This client has lost a lot of his wealth and it hurts, but that relates to one entity and his personal guarantees for that entity, the liquidators and his bankruptcy trustee could not touch the assets of the other entities because they are not his, they belong to the other entity and it is up to the director of the corporate trustees of those entities whether or not they distribute money to him.