Hybrid Trusts or in my own name?

Hi,

just want to ask some opinions, I've read many of the threads here about hybrid trusts (old views as i believe things have changed) and i thought i would put my situation forward and get a fresh and current view.

* Single with no dependants
* High tax bracket
* Age early 30's
* own my own property with some equity (no investment properties)
* low risk of being sued

I would like buy my first investment property in QLD, i'm looking for something i can subdivide or develop some town houses in a few years time and then hold on long term. So just land bank and negative gear for the time being. But either way a long term hold strategy, hopefully forever.

The question is should i just do the easy option of buy against my own name and negative gear, or set-up a hybrid trust and buy in that.

The reason i'm considering a hybrid trust is for estate planning (passing on to future kids) and i would like to make my sister and mum beneficiaries when the trust becomes cash flow positive. the are both on very low incomes and could do with financial help.

From my understand is more banks are lending to HT's and negative gearing is allowed.

The product i'm looking at is Chan and Naylors Property Investment Trust.
http://www.chan-naylor.com.au/ap-in-structures-property-investor-trust/

Some issues im concerned about is setup and maintenance costs, and using equity in the trust to buy more property (building a property portfolio)

If anyone out there has some experience with these trusts that would be good to hear their opinion.
 
Typically hits are problematic for finance. With most lenders not accepting the ownership structure period, and some lenders won't allow the "third party" guarantee to formalise the neg gearing potential.


C and n feel their product is less so much of an issue with lenders

Ta

Rolf
 
When you go HT you are limiting yourself to St George, CBA, Suncorp and NAB.

St George and Suncorp are probably the best when it comes to HT's, haven't tested CBA yet as its a new change in their policy and our few experiences with NAB have been terrible.
 
No issues with refinancing - most likely issues with lender policies in the future. I wouldn't be surprised if a Suncorp said "sorry ladies and gent but we don't have the appetite for HT's so no more top ups".
 
Plus some banks will charge you to have their legal teams review the trust deed (but this isn't specific to HT's and relates to all trusts).
 
yes i'm doing research :)
there are substantial benefits of using a HIT structure.. Mainly beneficiaries, but at a cost of financing flexibility.

regarding beneficiaries, i would be the only one while the trust is in negative gearing mode, but once it becomes positively geared can i then add beneficiaries?
 
yes i'm doing research :)
there are substantial benefits of using a HIT structure.. Mainly beneficiaries, but at a cost of financing flexibility.

regarding beneficiaries, i would be the only one while the trust is in negative gearing mode, but once it becomes positively geared can i then add beneficiaries?

What are the benefits that you are thinking of?
 
regarding beneficiaries, i would be the only one while the trust is in negative gearing mode, but once it becomes positively geared can i then add beneficiaries?

Do you mean you would be the only unit holder while negative gearing mode? There would be a wide class of discretionary beneficiaries separately, probably.

Trustees may be able to amend the deed to add beneficiaries but only if the deed permits. This may be a resettlement and result in CGT and stamp duty on the whole assets of the trust.
 
Terry W is a gun on what you are after. You could go and spend time with him, get advice and have a structure established and your costs would still come in less than trusts with a little TM beside their name.
 
Do you mean you would be the only unit holder while negative gearing mode? There would be a wide class of discretionary beneficiaries separately, probably.

Trustees may be able to amend the deed to add beneficiaries but only if the deed permits. This may be a resettlement and result in CGT and stamp duty on the whole assets of the trust.


Yes, it it possible to be the trustee, appointer and beneficiary. Then years down the track when the trust becomes positively geared add extra beneficiaries?
 
really all i want to do is build a property portfolio and let my family(future kids) reap the benefits without properties needing to change hands. nothing dodgy or sneaky.
 
Yes, it it possible to be the trustee, appointer and beneficiary. Then years down the track when the trust becomes positively geared add extra beneficiaries?

They would be already beneficiaries.
If you are considering distributing income to them then you will have to weigh this up with the unit holder claiming the interest. If the unit hold claims the interest they must be entitled to all the income and capital of the trust.
 
They would be already beneficiaries.
If you are considering distributing income to them then you will have to weigh this up with the unit holder claiming the interest. If the unit hold claims the interest they must be entitled to all the income and capital of the trust.


ok thanks 2 notes to take away,

1) children automatically become beneficiaries (does a spouse also?)

2) if i'm claiming interest i can't distribute funds to anyone by mylself
 
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