Property is a national pastime so it’s no surprise that property investment is one of the most popular choices for wealth creation.
How can you set up a trust?
The trust deed is an extremely important document that must be prepared correctly so you should seek professional advice. Your accountant or solicitor can organise for the trust deed to be prepared. It can cost on average up to $2000 to establish a discretionary trust and more for more complex trusts. It can be much costlier if the trust deed is not set up correctly at the start.
You will need to decide on the trustees and beneficiaries. The trustee can be a company (known as a ‘corporate trustee’), or one or more individual. A corporate trustee adds an extra layer of asset protection but costs more to set up (as the company needs to be registered).
When should I create a trust?
You need to consider how you will buy your investment property before you sign the contract.
If you don’t and you want to transfer ownership after settlement, then you may end up paying stamp duty twice; once on the initial purchase and then again when you transfer the property to the trustee. If you change your mind before settlement, but after signing the contract, then there can be substantial costs involved and possibly double stamp duty depending on the circumstances and jurisdiction.
If a trust structure suits your circumstances, then you should set one up before signing any contract. It can take several days and sometimes weeks for more complex trusts to be set up so plan ahead to manage expectations.
Get professional advice
Trusts can be really useful tools to purchase investment properties, but you should speak to your accountant and lawyer to find out if they will suit your circumstances.
This is Part 1 of 2 in a series provided by Harcourts Australia business partner LawLab, a high-volume national conveyancing service designed to make life easier for buyers and sellers to complete property deals smarter, more efficiently and with less administration. www.lawlab.com.au/