Question re trusts

[blunomore]

Can someone please explain or refer to information re the tax benefits (if there are any of note) of owning assets in a trust rather than in your own name.

I was told that there may be a (tiny) tax benefit.

Thanks

 

[Pitbull]

Not entirely true.

A trust in itself does get a tax "Benefit" but that is on dormant funds. If you use the trust as a running account you will get no benefit from it what so ever. Appart from the massive hassles by getting up a trust.

The Benefit part comes into play where lets say dad passed away and left the kids X amount of money. Kids are 10 - 13 and will only get the funds upon turning 21 (This interrest is tax free/Lowered Tax rate)

However, having a running trust account in/out payments interrest and so forth I highly doubt gets any benefit.

I'll have to recheck that, haven't dealt with tax in 8 years

 

[undesign]

Biggest benefit is probably that you effectively freeze your personal asset growth by having it in a trust - for estate duty purposes. There are other income tax benefits, but it is complicated.

I also haven't worked with tax and trust for a number of years. It is complex enough that you should speak to a genuine tax advisor.

 

[greggpb]

Don't bother with a trust until you got a descent amount of cash or are buying a house...

Its basically a company type tax structure which allows the avoidence of estate tax..


nice for kids and the like.. but expensive to adminster

 

[Nerfherder]

I know that they consider a trust capital gains so they have changed the way you pay tax on a trust.

 

[mikef]

Can someone please explain or refer to information re the tax benefits (if there are any of note) of owning assets in a trust rather than in your own name.

I was told that there may be a (tiny) tax benefit.

Thanks

Your question is to wide (vague) for an easy answer (Almost like asking "What are the benefits of using the internet?"). Trust properly set up are legal entities in their own right and as such offer numerous tax/estate planning options. Unless the size of the estate is large enough that the costs of setting up and maintaining the trust can be absorbed it would not normally be beneficial. That said there are many other reasons for using trusts including asset protection, income splitting, etc.

 

[blunomore]

Don't bother with a trust until you got a descent amount of cash or are buying a house...

Its basically a company type tax structure which allows the avoidence of estate tax..


nice for kids and the like.. but expensive to adminster

1. We already own various properties.

2. I wonder how estate tax is avoided?

3. In what way expensive? What type of fees?

 

[blunomore]

Your question is to wide (vague) for an easy answer (Almost like asking "What are the benefits of using the internet?"). Trust properly set up are legal entities in their own right and as such offer numerous tax/estate planning options. Unless the size of the estate is large enough that the costs of setting up and maintaining the trust can be absorbed it would not normally be beneficial. That said there are many other reasons for using trusts including asset protection, income splitting, etc.

Thanks mike.

 

[mikef]

2. I wonder how estate tax is avoided?

3. In what way expensive? What type of fees?

Estate duty can potentially be reduced primarily by removing future growth in the assets from the value of your estate. Income generated on the assets could also become taxable in the hands of the beneficiaries in place of the original owner.

Fees include trustees fees (normally a percentage of trust income) as well as accounting fees to maintain the financial records of the trust. These fees are normally time based.

 

[ebie]

Biggest advantage of a living trust is when you sell property that is owned by the trust - no transfer fees.

 

[ebie]

Another benefit is the protection from insolvency. Depending on the beneficiaries and trustees.

 

[Dolby]

When my father passed away there was a trust established. We think it's forged - but that's another story.

Due to it not being setup correctly, it just complexes everything. One major problem was that me brother and myself couldn't inherit the home from trust until age 28.

Now I'm 28 and 1/2 has been transferred to me while the other half is still in trust. I wanted to purchase his 1/2 (give trust the cash) and own 100% of the house which everyone agreed to.

After 3 months of fighting they came back and said I couldn't do it and needed to wait for him to 28 (I'll be 33) before I can do that - as the trust can't enter into contracts or make decisions with the current *wrong* way it has been setup.

With the current house pricing etc, it'd actually be great to fully own the property and be able to sell / do as a I wish - and purchase a smaller cluster with no bond if needed.

Now I just gotta wait :/