Q, Hi Paul. We’re confused with all the different trust structures you can get these days. We know we need asset protection, but which structure is best?
A. In my personal opinion it’s a Discretionary Trust.
Let’s start by listing a couple of different structures that are popular today. The three main ones are:
• Unit Trust
• Hybrid Trust
• Discretionary Trust
A quick overview of a Unit Trust is that it can get income, land and tax benefits due to its structure. As far as protection goes, the advice from my dream team is that the protection is not as good as a Discretionary Trust
When looking at Hybrid Trusts, they are a mix of Discretionary and Unit Trusts. The advice from my dream team is that they’re very expensive and complicated and are being looked into by the ATO and ACCC. Due to this, tax benefits and protection are questionable.
This leaves Discretionary Trusts. These trusts offer the best protection in Australia today as far as I’m concerned, and should be the first choice from all investors getting into property.
In saying this, remember that every person’s situation is different and you should consult an expert in Trust structure before you decide.
Paul’s tip:
To find out what my personal Trust structure is, how it all works and how it can work for you too, please e-mail me at info@propertysecrets.net.au
Source: "Ask Paul" which is a regular feature provided for Your Investment Property Magazine by Property Secrets where you can ask Paul for his thoughts on any of your property investment queries.