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Speaker 1: Hello, my name's Satasha Nabananga Bamblet. I'm a proud or

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Speaker 1: the Order Kerni Whoalbury and a waddery woman. And before

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Speaker 1: we get started on She's on the Money podcast, I

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Speaker 1: would like to acknowledge the traditional custodians of the land

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Speaker 1: of which this podcast is recorded on a wondery country,

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Speaker 1: acknowledging the elders, the ancestors and the next generation coming

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Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing

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Speaker 1: and the storytelling of you to make a difference for

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Speaker 1: today and lasting impactful tomorrow.

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Speaker 2: Let's get into it.

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Speaker 3: She's on the Money, She's on the Money.

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Speaker 4: Hello, and welcome to She's on the Money. The podcast

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Speaker 4: us that helps you master your finances so hard your

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Speaker 4: accountant will be shaking in their boots.

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Speaker 2: Oh my gosh, you want to make an accountant scared?

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Speaker 4: Yeah, kind of.

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Speaker 1: No.

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Speaker 2: I just want them to be to be proud of you. Proud.

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Speaker 4: They're going to be proud. So when you hear the

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Speaker 4: words family trust, do you immediately think of rich families

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Speaker 4: in babies finding over their fortunes, you know, the succession

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Speaker 4: or knives out kind of vibe where it's all private

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Speaker 4: Jets secret inheritances.

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Speaker 2: Yes, that's trust fund, baby, that's.

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Speaker 4: All we're thinking. Well, we're here to tell you that

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Speaker 4: family trusts aren't just for the mega wealthy, and they're

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Speaker 4: definitely not just a Hollywood plot point.

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Speaker 2: Oh, that's quite disappointing. So you're going to make it

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Speaker 2: boring for us to make it out every single family

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Speaker 2: trust as a very basic tax structure. Absolutely, how boring.

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Speaker 4: Let's see if we can make this as boring as possible.

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Speaker 4: But this is the main thing. Is a family trust

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Speaker 4: the right thing for you?

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Speaker 2: Are you a rich mad dog?

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Speaker 4: Secretly?

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Speaker 2: Really, we're going to find out.

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Speaker 4: I'm excited, and with me is the money expert who's

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Speaker 4: going to help us figure it all out. Victoria Divine, Hello.

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Speaker 2: I'm very excited to talk about this topic. I used

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Speaker 2: to work in the family wealth space, and like I

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Speaker 2: had exposure to billion dollar families, which is where I

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Speaker 2: learned about family trusts, not because I grew up wealthy.

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Speaker 2: I feel like, I don't know, maybe my parents this

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Speaker 2: would be good. Maybe your parents are doing the same thing.

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Speaker 2: They just wanted really humble down to earth kids. Good

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Speaker 2: luck that didn't happen for me, but they wanted that,

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Speaker 2: so they didn't tell me about the family wealth. And like,

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Speaker 2: one day, I know I'm going to walk into my parents'

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Speaker 2: house and they say the we were trying to teach

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Speaker 2: you to be humble, but we're actually super rich and

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Speaker 2: you have a family trust set out for you. I'll

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Speaker 2: be like, of course that makes sense.

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Speaker 4: Of course they're gonna be like, well, it's I was

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Speaker 4: not working, so we'll just give.

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Speaker 2: You the money.

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Speaker 4: We'll just give you the money.

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Speaker 2: No, I don't think that's going to happen. I have

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Speaker 2: asked my dad before, like, hey, where are all the

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Speaker 2: houses that you meant to gift me? He's like, oh,

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Speaker 2: I think they got lost in the mail. Like so

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Speaker 2: sorry about that of the male I know or something? Yeah,

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Speaker 2: Like what dad, I thought that I was born rich?

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Speaker 4: Yeah? Like okay, jokes over guys, Yeah, like my house.

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Speaker 2: Do you have this all the time too? All the time? Anyway.

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Speaker 2: I feel like every time we do a call out

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Speaker 2: for episode ideas, this topic always pops up, like literally

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Speaker 2: every single time. It's always in the dams, it's always

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Speaker 2: in our question boxes. So I guess we're finally delivering

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Speaker 2: what you've been asking for and we are breaking down

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Speaker 2: family trusts, what they are, how they work, whether you

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Speaker 2: actually need one, And as you said back, when you

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Speaker 2: hear family trust, it's super easy to picture I guess

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Speaker 2: dramatic rich families in movies they're fighting over in inheritance.

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Speaker 2: They're probably at a mahogany dining table doing so if

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Speaker 2: there's a maid in a maid's outfit, it's very stereotypical.

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Speaker 2: But thinking about a dish, Yeah, yeah, yeah, exactly. But

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Speaker 2: here's the thing. Family trusts. They actually can be a

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Speaker 2: very smart financial tool for regular Joe blows, for normal people,

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Speaker 2: not just people who have millions and are super wealthy.

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Speaker 2: But and I guess this is a very big butt.

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Speaker 2: There are some, if not a lot, of rules, risks,

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Speaker 2: and costs that you need to know about before you

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Speaker 2: jump on the bandwagon and go, oh, this might be

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Speaker 2: right for me. So we're going to go through all

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Speaker 2: of them, and I'm hoping that we can do it

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Speaker 2: in an exciting way. Oh yeah, because honestly, this can

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Speaker 2: be a little bit bland.

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Speaker 4: So what actually is a family trust?

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Speaker 2: A family trust, it's a legal structure I'm already designed

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Speaker 2: to hold and manage assets. Yes, So you could think

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Speaker 2: of it like property or some shares or a family business,

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Speaker 2: and it holds it on behalf of a group of people,

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Speaker 2: not necessarily just one person, although it could be one person,

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Speaker 2: and it's usually get these your family.

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Speaker 4: It's not always money.

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Speaker 2: I just know it could be assets. I could be assets.

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Speaker 2: And it's also known as a discretionary trust. This is

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Speaker 2: a complicated bit and I wish I could stand up

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Speaker 2: with a whiteboard because when I used to explain this

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Speaker 2: to clients, I'd be like, sit there, if you've got

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Speaker 2: a couple, I'm going to do some drawings on the

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Speaker 2: whiteboard about how the family trust works. And I would

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Speaker 2: like draw this big umbrella and put like your name's

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Speaker 2: up the top and show you how this works. But essentially,

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Speaker 2: the trust itself doesn't own the assets. You need to

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Speaker 2: think about the trust like a bucket. The bucket just exists.

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Speaker 2: And just because you put something in the bucket, does

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Speaker 2: it mean that the bucket owns the ball?

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Speaker 4: Oh? No?

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Speaker 2: Like, so say you own a basketball, beck and then

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Speaker 2: there's a bucket over there, and I say, go put

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Speaker 2: your basketball in the bucket, neat and tidy. Do you

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Speaker 2: still own the basketball? I would like to think so, yeah,

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Speaker 2: But you just put your basketball in the bucket. Yes,

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Speaker 2: the person in charge of this bucket.

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Speaker 4: So there's a keeper of the bucket, keeper of the bucket,

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Speaker 4: keeper off of the bucket the things inside necessarily.

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Speaker 2: Which is also the keeper of the trust. They're called

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Speaker 2: the trustee, yes, and then the ogre at the front

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Speaker 2: gate of the bucket. They decide how the income and

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Speaker 2: assets are distributed to the beneficiaries. So once you put

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Speaker 2: in the bucket, we go, Beck. You can't just go

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Speaker 2: pull it out whenever you want. You put it in

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Speaker 2: the bucket, but there's gatekeeper at the door that says, oh,

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Speaker 2: did you want to use your ball? No worries your back.

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Speaker 2: You're on the list. You're on the door list. That's

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Speaker 2: all good. You can come in, you can use a ball,

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Speaker 2: but put it back up when you're done.

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Speaker 4: Yep, okay.

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Speaker 2: So the bucket is like a safe spot. It's guarded,

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Speaker 2: it's looked after. If people were looking into you, Beck

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Speaker 2: and going to she own a basketball, hold on, we're

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Speaker 2: just going to check Beck. I can't see the basketball.

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Speaker 2: Hard to say, I'm the tax man. Beck must not

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Speaker 2: own it because it's over there in the bucket. Right,

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Speaker 2: looks legitimate because that trust acts as an individual when

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Speaker 2: it comes to tax. So then go and look at

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Speaker 2: the bucket as though that bucket was a human being,

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Speaker 2: and go, well, what's in the bucket? And they'd be

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Speaker 2: like a ball, All right, Well we'll tax that bucket,

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Speaker 2: not Beck, because we just checked Beck. Beck doesn't have

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Speaker 2: a basketball. Yeah yeah, yeah, does that make sense? I

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Speaker 2: feel like it's not making sense.

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Speaker 4: It does.

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Speaker 2: Basically, you've got someone who is the decision maker of

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Speaker 2: the trust and they decide how you get access to

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Speaker 2: your basketball. They decide how you can use it, when

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Speaker 2: you can use it, whether you can sell it, whether

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Speaker 2: you can share it with your friends, whether you can

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Speaker 2: rent that basketball out to your friends and make some money.

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Speaker 2: But if you rented it out to your friends and

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Speaker 2: made some money, that has to go back in the

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Speaker 2: bucket because the basketball and all of its assets live

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Speaker 2: in the bucket.

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Speaker 4: So if the keeper of the bucket, if it's like

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Speaker 4: tax time, so in the bucket is like thirty thousand

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Speaker 4: dollars worth of assets, the tax person will tax the

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Speaker 4: bucket separately as if it's its own entity.

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Speaker 2: So I'll knock on the door and be like, hello,

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Speaker 2: mister trustee, can we look in your bucket.

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Speaker 4: And if there's thirty thousand dollars worth of stuff in there,

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Speaker 4: then they'll just tax thirty thousand dollars.

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Speaker 2: Yes, ah, they're not going to just make it up

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Speaker 2: and pick random numbers.

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Speaker 4: No, but it doesn't go on to anyone else's.

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Speaker 2: No, No, it's not tied to you. You're just a beneficiary,

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Speaker 2: so you're not going to be taxed individual. And again

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Speaker 2: I'm not an accountant, so talk to your accountant about

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Speaker 2: how this works. But you're just listed as a beneficiary

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Speaker 2: of that trust. So I mean if you had some

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Speaker 2: money distributed to you, so say, you know, there's thirty

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Speaker 2: thousand dollars in that bucket, and this year you said, hello,

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Speaker 2: mister trustee, I would like some income, and I gave

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Speaker 2: you five thousand dollars. Now you've got that five thousand dollars.

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Speaker 2: You might be taxed on that. You need to declare

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Speaker 2: it because now it's become personal income instead of income

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Speaker 2: inside the bucket. Understood, But for the time that it

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Speaker 2: lives in its little bucket, it stays in the bucket,

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Speaker 2: and it will only be taxable by you personally if

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Speaker 2: you took it out forever. Okay, So basically the trustees,

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Speaker 2: the decision maker, and then the beneficiaries are the ones

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Speaker 2: who get the financial benefits. But there's so many bucks

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Speaker 2: in this episode, and this is I think very important.

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Speaker 2: The trustee doesn't just make decisions on a whim. And

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Speaker 2: as I said before, you don't just go no, not

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Speaker 2: can I hear? Just have the money and then they go,

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Speaker 2: let me think about it. They actually have to follow

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Speaker 2: what's called a trust deed, and that's like an instruction

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Speaker 2: manual or a rule book associated with the trust. And

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Speaker 2: that rule book there's a standard one, so if you

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Speaker 2: open a trust in Australia, it just comes with a

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Speaker 2: standard trusteed and you can edit that rule book when

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Speaker 2: you set it up because you haven't signed anything yet,

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Speaker 2: and I might go, oh, Becky, here are some extra

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Speaker 2: rules on the rule book. And a good example of

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Speaker 2: this is let's say I'm setting up a family trust

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Speaker 2: and I'm your mom, and I go, all right, I've

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Speaker 2: got some money. I've got my thirty thousand dollars in

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Speaker 2: my trust, and I want beck to benefit from this.

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Speaker 2: And I'm really excited about this because I'm just setting

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Speaker 2: myself up for future wealth. But also I saw this

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Speaker 2: a fair bit when I was managing family wealth. The

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Speaker 2: parents don't want you getting the money if you're being

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Speaker 2: a little bit naughty, right, So like if you're addicted

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Speaker 2: to drugs, if you haven't completed school, if you haven't

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Speaker 2: done the things that they stipulate. There could be a

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Speaker 2: rule that says, okay, if beck does any of these things,

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Speaker 2: she doesn't get her payouts, and that can go in

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Speaker 2: the trusteed. The trust need starts as all of the

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Speaker 2: basic requirements, nothing shiny, nothing exciting. But because the trust

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Speaker 2: deed is being set up by somebody who wants to

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Speaker 2: control it, they can put whatever they want in it.

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Speaker 2: They could write Beck hasterwear green every day, otherwise she

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Speaker 2: doesn't get her money.

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Speaker 4: Okay, I can abide by that.

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Speaker 2: I think that the important thing here is those rules

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Speaker 2: could be as rogue as you want. Historically, I've also seen,

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Speaker 2: and this was a billion dollar family, if the grandkids

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Speaker 2: didn't come to Christmas for two years running, they didn't

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Speaker 2: get their trust distribution.

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Speaker 4: That oh wow, so you.

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Speaker 2: Wouldn't get paid. So if you don't come to Christmas,

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Speaker 2: grandparents aren't giving you some cash all all of a sudden.

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Speaker 4: I love Christmas, yeah, all of a sudden.

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Speaker 2: But that's a good example of you know, a rule

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Speaker 2: that was put into a trusteed by a family to

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Speaker 2: manage the wealth and manage how it was distributed and

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Speaker 2: just what they wanted. Sure, no judgment, Like literally, you do,

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Speaker 2: you your money, you can distribute it however you want.

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Speaker 2: But I have seen people limit it like this money

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Speaker 2: will be distributed to back when she turns eighteen if

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Speaker 2: she's in university. Sure, if she's not, it's twenty five.

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Speaker 2: So they can make up with their own rules anyway, Okay,

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Speaker 2: got you. Indeed literally just sets out how the trust

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Speaker 2: can operate, who the beneficiaries are, what the trustee can

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Speaker 2: and can't do. So you're making rules for the gatekeeper

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Speaker 2: as well. So I guess in short, the deed is

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Speaker 2: what keeps the trust fair, legal and running really smoothly.

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Speaker 4: I am really curious to know, like how to actually

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Speaker 4: set up.

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Speaker 2: And I'll tell you all about how to set up

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Speaker 2: a trust. Okay, but actually good idea. Let's go to

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Speaker 2: a break and on the flip side, I'm gonna talk

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Speaker 2: to you about how family trust can save you money

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Speaker 2: when done right. What's setting up one takes and what

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Speaker 2: it's going to cost. And we'll get into the needy gritty.

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Speaker 4: Great, welcome back everyone. We woo.

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Speaker 2: We're talking about family sure us.

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Speaker 4: Whom as something very very exciting today family trusts. So

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Speaker 4: before we went to the break, I was wanting to know,

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Speaker 4: like how you set up a trust and how you

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Speaker 4: even take money out or assets out how it were,

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Speaker 4: and also like what goes into running one, Like is

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Speaker 4: it as complicated as it sounds?

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Speaker 2: Yes and no. So there's a bit of admin involved

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Speaker 2: and every single year a family trust has to have

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Speaker 2: prepared a set of financial statements, just like a company would.

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Speaker 2: So I think one of the best ways to think

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Speaker 2: about a family trust is that it's a business. It

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Speaker 2: doesn't have any products, it doesn't have any services, but

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Speaker 2: it's going to act in isolation over there, sure, and

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Speaker 2: it's going to hold some assets. So these financials they're

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Speaker 2: going to calculate how much profit the trust made basically

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Speaker 2: all the income earned by the trust and then minust

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Speaker 2: sixpenses and any carryover losses for them like previous years exce.

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Speaker 4: Feel like if a trust has got shares in it.

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Speaker 2: For anything, Okay, So in the same way that you

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Speaker 2: and I would sit down and do your tax return

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Speaker 2: and we go beck, how much did you earn this year?

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Speaker 2: All right, did you have any expenses where you can claim, Oh,

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Speaker 2: yeah you did. You did some travel, okay, no worries.

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Speaker 2: Did you do some side hustles? Yeah, yeah you did?

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Speaker 2: All right, what profit did you make? And like, we're

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Speaker 2: just doing like a P and L for the trust

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Speaker 2: in the same way that I would do your tax reporting.

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Speaker 2: But we need to get all of the admin together.

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Speaker 2: And you know, if last year you had a loss,

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Speaker 2: we would be able to carry that forward. You can

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Speaker 2: do the same thing in a personal trust. Then once

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Speaker 2: the profit has been calculated, same theory I suppose is

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Speaker 2: me calculating how much you earned in total this year,

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Speaker 2: which is hard to do right now. Until June, I

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Speaker 2: can't sit down and be like, oh how much did

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Speaker 2: you make this year? Back we go, well, I know

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Speaker 2: what my annual salary is, but I don't know what

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Speaker 2: my side hustles did. So like we have to wait

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Speaker 2: until a certain period of the year to be able

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Speaker 2: to calculate this. But once the profit is calculated at

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Speaker 2: the end of the financial year, the trustee gets to

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Speaker 2: work deciding how they're going to split that profit among

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Speaker 2: the beneficiaries, so you know who gets what slice of

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Speaker 2: the pizza. But here is the important bit. The trust

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Speaker 2: itself doesn't pay tax on the profits.

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Speaker 4: Oh okay, so you do.

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Speaker 2: The asset owner or the Yeah, so it's living in

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Speaker 2: the bucket, and the bucket is self sufficient. The beneficiaries

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Speaker 2: pay tax, so whatever amount is distributed to each beneficiary.

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Speaker 2: So like as we said before, there's thirty thousand dollars

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Speaker 2: in the bucket and we gave you five thousand dollars,

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Speaker 2: you might not be the only beneficiary, but the profits

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Speaker 2: of that So you could park thirty grand in there.

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Speaker 2: And then if in one year we looked at it

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Speaker 2: and there's still only thirty thousand dollars, we wouldn't be

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Speaker 2: declaring a profit because the trust just still has the

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Speaker 2: same assets in it. It hasn't made any money. Yeah,

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Speaker 2: But if that thirty thousand dollars was invested and we

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Speaker 2: made one thousand dollars, the ATO would go, oh, how

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Speaker 2: much is in the account or how much is in

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Speaker 2: the trust, And we'd go, well, it's thirty one thousand

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Speaker 2: dollars and the ATO would go, okay, cool, how much

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Speaker 2: was in there to begin with than dollars? Great, you've

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Speaker 2: made a thousand dollar profit. We're going to tax you

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Speaker 2: on the thousand dollar profit.

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Speaker 4: Tax everyone who.

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Speaker 2: So we're going to be taxing the beneficiaries because the

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Speaker 2: profit can't stay in the trust. The profit has to

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Speaker 2: be taken out of the trust and distributed to you.

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Speaker 2: So the thirty thousand dollar asset can be parked over there,

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Speaker 2: But if we made a thousand dollar profit, we need

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Speaker 2: to distribute it. So if you're a beneficiary and you

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Speaker 2: already have a salary for a job, that trust is

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Speaker 2: on top of that, and you'll be taxed at your

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Speaker 2: individual tax rate. Let's say you've got I know what

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Speaker 2: your job is. You pay thirty two and a half

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Speaker 2: cents every dollar that you earn. Yep. So if I

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Speaker 2: then distributed another one thousand dollars to you this year, Beck,

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Speaker 2: you would be paying thirty two and a half cents

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Speaker 2: in the dollar. So you would be paying three hundred

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Speaker 2: and twenty dollars in tax on that, and you would

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Speaker 2: take the profit home.

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Speaker 4: Okay, got you?

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Speaker 2: Hold on backtrack, Beck, I think I need to correct myself. Oh,

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Speaker 2: I think I said that you were paying thirty two

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Speaker 2: and a half cents in the dollar. Yeah, tax, which

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Speaker 2: would have been correct, but the tax rates have just

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Speaker 2: changed so if I'm not wrong for this year, so

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Speaker 2: the twenty twenty four to twenty twenty five tax year,

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Speaker 2: you're actually only paying thirty cents in the dollar. Oh

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Speaker 2: that's nice, which is nice. You've got a little bit

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Speaker 2: of a tax. Yeah, that's good. We love to see it.

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Speaker 2: So just correcting myself, it wouldn't be three to twenty

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Speaker 2: or to be three hundred.

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Speaker 4: Okay, gotcha.

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Speaker 2: Sorry, you know when you're just like, I'm a really

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Speaker 2: hold on, totally chick myself before I wreck myself.

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Speaker 4: Absolutely, that number is still stuck in my head.

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Speaker 2: Yeah, thirty two and a half stent. I feel like

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Speaker 2: I've been saying it for literally years. I need to

349
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Speaker 2: like recorrect the marginal tax rate chart that lives in

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Speaker 2: my brain right, bit.

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Speaker 4: Hard, But there's so many numbers. It's fair enough. Okay,

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Speaker 4: So the trust doesn't paid tax. No, say, like there

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Speaker 4: are five beneficiaries, and so that one thousand dollar profit

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Speaker 4: is equally distributed to regardless of who owns the asset.

355
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Speaker 2: Well it could be. So that's where it gets a

356
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Speaker 2: little bit thickle. Right. So, and I'm not saying that

357
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Speaker 2: this is good, but I've seen it a lot. Say,

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Speaker 2: you've got sibling, And your sibling's nineteen and they have

359
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Speaker 2: their first job. But they're not working very hard because obviously,

360
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Speaker 2: if they've got a family trust, they're from a really

361
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Speaker 2: wealthy family. No that's not true, but you know what

362
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Speaker 2: I mean. Oh yeah, but they're not working that much.

363
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Speaker 2: So they actually just did a few casual shifts. They

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Speaker 2: earned twelve thousand dollars this year, Beck, Because they just

365
00:17:18,920 --> 00:17:21,359
Speaker 2: earnt about a grand a month doing some casual cafe

366
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Speaker 2: work on a Sunday. Their marginal tax rate is actually

367
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Speaker 2: nothing because the first eighteen thy two hundred dollars Beck

368
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Speaker 2: that everyone in Australia earns is actually tax at zero dollars,

369
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Speaker 2: so no tax at all. So if your eighteen year

370
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Speaker 2: old sibling earned twelve grand, they've got a bit of

371
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Speaker 2: buffer before they hit that eighteen thousand, two hundred dollar limit.

372
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Speaker 2: So if there's five of you and you're on a

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Speaker 2: marginal tax rate of thirty cents in the dollar, your trustee,

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Speaker 2: who's the person who makes all the decisions, might sit

375
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Speaker 2: down and be like, Beck, what's your marginal tax rate?

376
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Speaker 2: Thirty cents? Okay, Well, to make the most of this

377
00:17:57,280 --> 00:18:00,440
Speaker 2: money this year, we're going to distribute the whole amount

378
00:18:00,560 --> 00:18:03,280
Speaker 2: to your little sister because they're not going to pay

379
00:18:03,280 --> 00:18:05,960
Speaker 2: any tax if we distribute it, but we would lose

380
00:18:06,080 --> 00:18:08,840
Speaker 2: thirty percent if we gave it to you, Beck. Yeah,

381
00:18:09,240 --> 00:18:12,040
Speaker 2: so they might make decisions like that. I'm not saying

382
00:18:12,040 --> 00:18:14,760
Speaker 2: that it's fair and reasonable like that all comes into

383
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Speaker 2: how family wealth works, but families might choose to distribute

384
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Speaker 2: to the person on the lowest tax bracket. So one

385
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Speaker 2: of the biggest perks of a family trust is that

386
00:18:26,520 --> 00:18:29,919
Speaker 2: it's flexible, and the flexibility that you get when it

387
00:18:29,960 --> 00:18:33,360
Speaker 2: comes to tax planning is a family unit. So unlike

388
00:18:33,440 --> 00:18:37,520
Speaker 2: other structures, a family trust actually lets you allocate income

389
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Speaker 2: to different family members based on the individual tax situation. Right, Okay,

390
00:18:41,640 --> 00:18:43,960
Speaker 2: n't sit down and be like, Okay, Beck's income means

391
00:18:44,040 --> 00:18:46,199
Speaker 2: she pays thirty cents in the dollar. You know, your

392
00:18:46,240 --> 00:18:48,719
Speaker 2: mom might be really rich, has big dog job, and

393
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Speaker 2: he's earning more than one hundred and ninety thousand dollars,

394
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Speaker 2: so he's paying forty five cents, So it doesn't make

395
00:18:53,960 --> 00:18:56,000
Speaker 2: a lot of sense to distribute to your dad. But

396
00:18:57,160 --> 00:19:01,440
Speaker 2: your mum, she doesn't work, Okay, being very stereotypical, Yes,

397
00:19:01,680 --> 00:19:04,199
Speaker 2: just to paint a picture, right, Like, I'm definitely not

398
00:19:04,240 --> 00:19:06,440
Speaker 2: saying that this is the norm, but it does paint

399
00:19:06,800 --> 00:19:09,359
Speaker 2: a very clear picture of how this works. Right, So

400
00:19:10,119 --> 00:19:12,679
Speaker 2: your mum, she doesn't work. So if one person in

401
00:19:12,720 --> 00:19:14,639
Speaker 2: your family is on a lower tax bracket, like a

402
00:19:14,680 --> 00:19:17,000
Speaker 2: stay at home parent or partner, or a UNI student

403
00:19:17,119 --> 00:19:20,639
Speaker 2: or maybe a retired parent, you could direct most of

404
00:19:20,680 --> 00:19:24,480
Speaker 2: the trust's income to them, which then reduces your overall

405
00:19:24,520 --> 00:19:27,400
Speaker 2: tax bill for the family. So like, if I distributed

406
00:19:27,520 --> 00:19:30,160
Speaker 2: that one thousand dollars to the dad, we're losing forty

407
00:19:30,200 --> 00:19:33,399
Speaker 2: five percent of it. But if mom, who hasn't worked

408
00:19:33,440 --> 00:19:37,359
Speaker 2: this year, gets the whole thousand dollars, and you know,

409
00:19:37,480 --> 00:19:40,520
Speaker 2: as a family, we then manage our cash float together.

410
00:19:41,440 --> 00:19:44,719
Speaker 2: That's the most tax effective decision for my family because

411
00:19:44,840 --> 00:19:47,000
Speaker 2: you know, maybe what's mine is yours and what's yours

412
00:19:47,080 --> 00:19:49,000
Speaker 2: is mine, and we actually have joint finances. But if

413
00:19:49,000 --> 00:19:51,240
Speaker 2: it's distributed to the mom and we claim it on

414
00:19:51,280 --> 00:19:55,359
Speaker 2: her tax, we're in the most financially beneficial position, right,

415
00:19:55,720 --> 00:19:59,439
Speaker 2: And it's a very strategic way to manage income and

416
00:19:59,480 --> 00:20:01,159
Speaker 2: make sure less of it ends up going into the

417
00:20:01,200 --> 00:20:03,800
Speaker 2: hands of the tax man. Yeah, very fat I'm not

418
00:20:03,880 --> 00:20:07,040
Speaker 2: saying that we're trying to be evasive of tax, right,

419
00:20:07,520 --> 00:20:09,480
Speaker 2: and there are lots of rules that have been put

420
00:20:09,480 --> 00:20:11,840
Speaker 2: in place to make sure that tax evasion can't happen.

421
00:20:12,280 --> 00:20:17,560
Speaker 2: But the key is here. The trustee has to distribute

422
00:20:17,640 --> 00:20:20,240
Speaker 2: every single dollar of the profit at the end of

423
00:20:20,240 --> 00:20:23,199
Speaker 2: the financial year. Can't just build up in the trust.

424
00:20:23,280 --> 00:20:25,199
Speaker 2: You can't just make keeps the money in the trust.

425
00:20:25,680 --> 00:20:28,840
Speaker 2: So that thousand dollars that we made, if you don't

426
00:20:28,880 --> 00:20:32,760
Speaker 2: allocate that out to your beneficiaries, you can leave it

427
00:20:32,800 --> 00:20:35,080
Speaker 2: in the trust if you want, but you will be

428
00:20:35,119 --> 00:20:39,159
Speaker 2: paying forty five cents tax, so you will be paid

429
00:20:39,240 --> 00:20:41,800
Speaker 2: for the most. So like in this situation where we've

430
00:20:41,800 --> 00:20:44,280
Speaker 2: got beck on thirty percent, you've got that younger sibling

431
00:20:44,760 --> 00:20:47,760
Speaker 2: that earns basically not much, and then you've got you know,

432
00:20:47,880 --> 00:20:50,639
Speaker 2: mum who doesn't work. Doesn't make sense to leave the

433
00:20:50,720 --> 00:20:53,800
Speaker 2: money in the trust. Yeah, no, no, okay, so we

434
00:20:53,920 --> 00:20:54,600
Speaker 2: distribute it.

435
00:20:54,880 --> 00:20:57,920
Speaker 4: Yeah. I just want to quickly check that the profits

436
00:20:57,920 --> 00:21:00,080
Speaker 4: are definitely different to like, say you've added a for

437
00:21:00,160 --> 00:21:02,680
Speaker 4: one hundred thousand dollars in assets. Yes, one hundred and

438
00:21:03,160 --> 00:21:04,680
Speaker 4: it's very different, yes.

439
00:21:04,760 --> 00:21:07,800
Speaker 2: Understood, Okay, It's like it's like putting money into your

440
00:21:07,800 --> 00:21:10,200
Speaker 2: savings account. The ater is not going to be like, oh, Beck,

441
00:21:10,280 --> 00:21:12,639
Speaker 2: has you know another thousand dollars in a savings account?

442
00:21:12,680 --> 00:21:14,359
Speaker 2: Will tax her on that? Like they know it's post

443
00:21:14,440 --> 00:21:16,600
Speaker 2: tax income. Yes, okay, got you?

444
00:21:16,760 --> 00:21:21,000
Speaker 4: Okay, So the trust doesn't pay tax, but the beneficiaries due.

445
00:21:21,280 --> 00:21:24,720
Speaker 4: So would families not just give all their income to

446
00:21:24,800 --> 00:21:25,959
Speaker 4: the young kids?

447
00:21:26,359 --> 00:21:27,240
Speaker 2: Like that makes sense?

448
00:21:27,400 --> 00:21:27,600
Speaker 5: Right?

449
00:21:27,680 --> 00:21:27,880
Speaker 1: Yeah?

450
00:21:27,960 --> 00:21:30,080
Speaker 2: And do you know why I picked the nineteen year

451
00:21:30,119 --> 00:21:33,600
Speaker 2: old example because they're over the age of eighteen. Yes,

452
00:21:34,240 --> 00:21:36,440
Speaker 2: because I was hoping that we would get to this topic.

453
00:21:37,160 --> 00:21:40,400
Speaker 2: But similarly to the way that we've spoken about investing

454
00:21:40,440 --> 00:21:42,760
Speaker 2: for kids, which we've done episodes on you can find

455
00:21:42,800 --> 00:21:45,399
Speaker 2: them by looking up, She's on the money investing for kids.

456
00:21:46,080 --> 00:21:49,440
Speaker 2: When people are underage, different tax rates apply. So if

457
00:21:49,480 --> 00:21:51,960
Speaker 2: you gave all of your income from a family trust

458
00:21:52,119 --> 00:21:55,520
Speaker 2: to your kids, and thought, great, that makes sense because

459
00:21:55,840 --> 00:21:59,440
Speaker 2: you know, little Johnny he's only fifteen or he's only five,

460
00:22:00,080 --> 00:22:02,080
Speaker 2: I can distribute all the income from my trust to

461
00:22:02,160 --> 00:22:04,280
Speaker 2: him because he didn't have any taxable income. And you

462
00:22:04,320 --> 00:22:07,440
Speaker 2: think that's a really good idea. The government's like, what, Beck,

463
00:22:07,600 --> 00:22:09,960
Speaker 2: we already thought of this, because we're not going to

464
00:22:10,080 --> 00:22:12,800
Speaker 2: let you if a tax you can use your wife.

465
00:22:12,840 --> 00:22:14,919
Speaker 2: You can use your husband if they you know, a

466
00:22:15,000 --> 00:22:18,800
Speaker 2: stay at home parents. Sure, that's the line we're going

467
00:22:18,880 --> 00:22:21,520
Speaker 2: to draw. Sure you try to use your kids. The

468
00:22:21,560 --> 00:22:25,120
Speaker 2: ATO actually has a very strict rule on miners. Kids

469
00:22:25,200 --> 00:22:28,200
Speaker 2: under the age of eighteen only have a tax free

470
00:22:28,240 --> 00:22:31,879
Speaker 2: threshold of get this, four hundred and sixteen dollars a

471
00:22:31,960 --> 00:22:35,439
Speaker 2: year for income distributed from a trust. Wow, so that

472
00:22:35,560 --> 00:22:37,399
Speaker 2: thousand dollars isn't going to go that far, is it?

473
00:22:37,440 --> 00:22:38,119
Speaker 4: No? True?

474
00:22:38,200 --> 00:22:41,360
Speaker 2: No, anything above that is taxed at the top marginal

475
00:22:41,400 --> 00:22:42,800
Speaker 2: tax rate of forty five cents.

476
00:22:42,840 --> 00:22:46,440
Speaker 4: Oh that's unfair. What a these little kids exactly trying

477
00:22:46,440 --> 00:22:47,159
Speaker 4: to make it money.

478
00:22:47,240 --> 00:22:49,120
Speaker 2: So you might go, all right, well, I think kids

479
00:22:49,119 --> 00:22:51,040
Speaker 2: aren't going to wear a Maybe do need to get

480
00:22:51,040 --> 00:22:51,800
Speaker 2: a wife after that?

481
00:22:52,240 --> 00:22:52,520
Speaker 3: Yeah?

482
00:22:52,640 --> 00:22:55,480
Speaker 4: Okay, okay, So I want to know, like the reason

483
00:22:55,760 --> 00:22:57,560
Speaker 4: is to start up a trust because I'm thinking, if

484
00:22:57,560 --> 00:23:00,040
Speaker 4: you like, you're already paying tax on it. Okay, So

485
00:23:00,040 --> 00:23:01,560
Speaker 4: again one of the reasons the set up a trust,

486
00:23:01,600 --> 00:23:02,119
Speaker 4: let's start with that.

487
00:23:02,160 --> 00:23:05,280
Speaker 2: Okay. So asset protection is the number one reason people

488
00:23:05,320 --> 00:23:08,639
Speaker 2: set up a trust. Assets in a trust they're not

489
00:23:08,720 --> 00:23:12,720
Speaker 2: technically yours anymore. So like the basketball example, I gave before.

490
00:23:13,119 --> 00:23:14,760
Speaker 2: We had a bucket over there, and I asked you

491
00:23:14,800 --> 00:23:17,399
Speaker 2: to put your basketball in the bucket. Technically, you know

492
00:23:17,400 --> 00:23:20,280
Speaker 2: that's still your basketball. Yeah, I'm not going to withhold

493
00:23:20,320 --> 00:23:22,760
Speaker 2: the basketball from you, and you know, have an argument

494
00:23:22,800 --> 00:23:24,560
Speaker 2: over the fact that someone else owns it. Someone else

495
00:23:24,600 --> 00:23:27,240
Speaker 2: doesn't own it, but it's now protected. It's in the bucket.

496
00:23:27,320 --> 00:23:29,600
Speaker 2: Let's pretend it's a magic bucket. Yeah, no one can

497
00:23:29,640 --> 00:23:31,960
Speaker 2: take it off you. If I like came over to you,

498
00:23:32,000 --> 00:23:34,920
Speaker 2: sniffed around, was like, do you have a basketball? Looked

499
00:23:34,960 --> 00:23:37,399
Speaker 2: up your top. Can't see a basketball that does not

500
00:23:37,480 --> 00:23:41,280
Speaker 2: have a basketball. They're protected. Beck, let's be dramatic. If

501
00:23:41,280 --> 00:23:44,600
Speaker 2: ever you got sued, if ever you filed for bankruptcy,

502
00:23:45,359 --> 00:23:47,439
Speaker 2: or you went through a really messy divorce and a

503
00:23:47,480 --> 00:23:49,800
Speaker 2: lawyer was sniffing around, being like, she got a basketball.

504
00:23:50,320 --> 00:23:51,920
Speaker 2: I want to see if I can take her basketball

505
00:23:51,920 --> 00:23:54,400
Speaker 2: off her and give it to her ex wife. Yeah,

506
00:23:54,520 --> 00:23:55,240
Speaker 2: they can't see it.

507
00:23:55,280 --> 00:23:56,159
Speaker 4: They can't see it.

508
00:23:56,160 --> 00:23:58,480
Speaker 2: It's not theirs. I mean, in a court of law,

509
00:23:58,480 --> 00:24:00,240
Speaker 2: you will have to declare your trust in the sets

510
00:24:00,280 --> 00:24:02,400
Speaker 2: in your trust. But if you're being sued or if

511
00:24:02,400 --> 00:24:06,040
Speaker 2: you go bankrupt, like, it is definitely a protected asset.

512
00:24:06,160 --> 00:24:06,760
Speaker 4: Okay.

513
00:24:07,000 --> 00:24:10,600
Speaker 2: The second thing there is, a trust is very handy

514
00:24:10,960 --> 00:24:14,080
Speaker 2: if you're planning on passing wells down to your children

515
00:24:14,200 --> 00:24:18,080
Speaker 2: okay even their kids in the future. So it actually

516
00:24:18,200 --> 00:24:22,280
Speaker 2: lets you control exactly how and when your assets are distributed.

517
00:24:22,280 --> 00:24:23,879
Speaker 2: So you remember before I was telling you about a

518
00:24:23,920 --> 00:24:26,800
Speaker 2: trusteed just staying out the rule book. So a good

519
00:24:26,800 --> 00:24:29,760
Speaker 2: example here is instead of I guess, handing everything over

520
00:24:29,800 --> 00:24:31,359
Speaker 2: in a big chunk and being like, you could have

521
00:24:31,440 --> 00:24:34,479
Speaker 2: all of my stuff back, you could set it up

522
00:24:34,520 --> 00:24:36,639
Speaker 2: so that your kids get access to money when they

523
00:24:36,720 --> 00:24:39,960
Speaker 2: hit certain milestones, so that when they turn eighteen or

524
00:24:40,000 --> 00:24:42,359
Speaker 2: they turn twenty five and they're buying their first home.

525
00:24:42,640 --> 00:24:45,520
Speaker 2: It's all about making sure that your hard earned assets

526
00:24:45,880 --> 00:24:47,960
Speaker 2: stay in the family and are used in a way

527
00:24:48,000 --> 00:24:50,200
Speaker 2: that you would want them to be. And that's where

528
00:24:50,240 --> 00:24:52,880
Speaker 2: you get to create the rules. And I think that

529
00:24:52,880 --> 00:24:53,680
Speaker 2: that's really fun.

530
00:24:54,000 --> 00:24:56,160
Speaker 4: Okay. Is there any other reason?

531
00:24:56,560 --> 00:24:59,760
Speaker 2: Yep, So there's a couple. So okay, there's another big

532
00:24:59,800 --> 00:25:04,240
Speaker 2: one protecting against family disputes. So a trust can actually

533
00:25:04,359 --> 00:25:09,200
Speaker 2: avoid arguments over things like inheritances or assets because beck,

534
00:25:09,320 --> 00:25:12,840
Speaker 2: let's face it, stuff gets so messy when more money

535
00:25:12,920 --> 00:25:16,679
Speaker 2: is involved. More money, more problems literally, you know how

536
00:25:16,680 --> 00:25:19,240
Speaker 2: we're talking about the Mahogany table and the family talking

537
00:25:19,240 --> 00:25:22,960
Speaker 2: about their trustee. We all know that that situation often

538
00:25:23,000 --> 00:25:26,480
Speaker 2: arises when you know, and I'm not trying to be

539
00:25:26,560 --> 00:25:29,440
Speaker 2: rude here, but a death in the family happens, they're

540
00:25:29,440 --> 00:25:31,840
Speaker 2: all fighting over the will and disputing the will and

541
00:25:31,880 --> 00:25:33,920
Speaker 2: being like, no, that's not what Beck would want. Oh

542
00:25:33,920 --> 00:25:36,480
Speaker 2: my god, Beck's husband was cheating on here in this

543
00:25:36,600 --> 00:25:38,199
Speaker 2: and that. Do you know what I mean against real dramatic,

544
00:25:38,240 --> 00:25:41,439
Speaker 2: real quick, especially when lots of money is involved. Like,

545
00:25:41,560 --> 00:25:46,399
Speaker 2: it's actually insane how messy these things can become. But

546
00:25:47,000 --> 00:25:51,800
Speaker 2: a trusteed that's not a will that's set up much before.

547
00:25:52,119 --> 00:25:55,840
Speaker 2: That's a full document that is often not able to

548
00:25:55,840 --> 00:25:58,280
Speaker 2: be contested in the same way that you could be like,

549
00:25:58,840 --> 00:26:01,479
Speaker 2: I'm going to contest that will, So a trusteed it

550
00:26:01,560 --> 00:26:04,600
Speaker 2: lays out everything and there's actually no room for confusion

551
00:26:05,080 --> 00:26:08,320
Speaker 2: or arguments over who gets what. That's clever, and it

552
00:26:08,359 --> 00:26:11,920
Speaker 2: can be annoying, like and I'm not saying that all

553
00:26:11,920 --> 00:26:14,240
Speaker 2: of these things are you know, perfect, and the trust

554
00:26:14,280 --> 00:26:16,480
Speaker 2: needs set up and then no one argues Like I

555
00:26:16,520 --> 00:26:19,159
Speaker 2: have sat in many a family meeting, not my family

556
00:26:19,520 --> 00:26:22,239
Speaker 2: where the great grandparents have set something up and it

557
00:26:22,320 --> 00:26:24,960
Speaker 2: no longer works for today. You know, they might not

558
00:26:25,000 --> 00:26:28,000
Speaker 2: be able to access their trust distribution until they're married.

559
00:26:28,560 --> 00:26:30,159
Speaker 2: And I mean, if that was set up in the

560
00:26:30,240 --> 00:26:33,040
Speaker 2: nineteen sixties, you might go, okay, like that kind of

561
00:26:33,040 --> 00:26:37,000
Speaker 2: makes sense because little Johnny's gonna get married. Johnny might

562
00:26:37,040 --> 00:26:38,959
Speaker 2: not want to get married in twenty twenty five, and

563
00:26:39,000 --> 00:26:43,240
Speaker 2: that is very normal now. So sometimes it does cause friction.

564
00:26:43,800 --> 00:26:45,560
Speaker 2: And then the last thing I want to say is

565
00:26:45,600 --> 00:26:48,320
Speaker 2: trusts can also have massive benefits if you're running a

566
00:26:48,320 --> 00:26:51,520
Speaker 2: small business. They can hold your business assets, they can

567
00:26:51,680 --> 00:26:55,200
Speaker 2: protect you from personal liabilities, and they can allow profits

568
00:26:55,200 --> 00:26:57,240
Speaker 2: to be distributed to family members in a way that

569
00:26:57,359 --> 00:27:00,199
Speaker 2: is tax effective. And my friend, that is why I

570
00:27:00,240 --> 00:27:02,679
Speaker 2: have a family trust. I say, it's not heaps in

571
00:27:02,720 --> 00:27:06,080
Speaker 2: it right now. But my businesses are not owned by me.

572
00:27:06,640 --> 00:27:09,400
Speaker 2: They are owned by my trust. Ah, and I am

573
00:27:09,440 --> 00:27:11,080
Speaker 2: the beneficiary of my trust.

574
00:27:11,359 --> 00:27:12,960
Speaker 4: I see soul beneficiary.

575
00:27:13,000 --> 00:27:16,080
Speaker 2: I am the sole beneficiary trust God. Yeah, And that

576
00:27:16,240 --> 00:27:18,800
Speaker 2: was set up so that I can protect myself so

577
00:27:18,840 --> 00:27:21,480
Speaker 2: that if anything goes wrong, I go bankrupt, if I

578
00:27:21,480 --> 00:27:23,879
Speaker 2: get sued, she's on the money is protected. If I

579
00:27:23,920 --> 00:27:25,880
Speaker 2: go through a messy divorce with Steve, which I hope

580
00:27:25,920 --> 00:27:28,280
Speaker 2: never happens, because I do genuinely think that even if

581
00:27:28,320 --> 00:27:30,880
Speaker 2: that happened, we're kind of on the same page. Yes,

582
00:27:31,119 --> 00:27:33,960
Speaker 2: but I am protected in a way that makes sense.

583
00:27:34,119 --> 00:27:36,440
Speaker 2: He's not a beneficiary on my trust if you want

584
00:27:36,480 --> 00:27:38,040
Speaker 2: to know, because it doesn't make sense for him to

585
00:27:38,040 --> 00:27:40,480
Speaker 2: be a beneficiary on my trust. Yeah, he has his

586
00:27:40,560 --> 00:27:46,280
Speaker 2: own full time income. I can't distribute income to him. Yeah,

587
00:27:46,280 --> 00:27:48,440
Speaker 2: in a way that would make sense. And just really quickly,

588
00:27:48,480 --> 00:27:49,920
Speaker 2: if you're like going through a divorce, you know how

589
00:27:49,960 --> 00:27:51,840
Speaker 2: sometimes people are like, oh, you can take half of

590
00:27:51,920 --> 00:27:54,760
Speaker 2: whatever if something's in a trust, like they can't. So

591
00:27:54,880 --> 00:27:57,240
Speaker 2: this is where it gets a little bit tricky sticky, right,

592
00:27:57,480 --> 00:27:59,399
Speaker 2: It depends when the trust was established.

593
00:27:59,480 --> 00:27:59,920
Speaker 4: I see.

594
00:28:00,119 --> 00:28:03,439
Speaker 2: So if the trust was established prior to you getting

595
00:28:03,440 --> 00:28:08,960
Speaker 2: into that relationship to marital assets. I'm not a lawyer.

596
00:28:09,000 --> 00:28:10,600
Speaker 2: You need to talk to your lawyer. This is just

597
00:28:10,640 --> 00:28:14,119
Speaker 2: how I've seen it fall out for previous clients of mine.

598
00:28:14,600 --> 00:28:17,600
Speaker 2: But if you established that trust, well in a relationship,

599
00:28:17,680 --> 00:28:20,640
Speaker 2: it could be contested regardless of your magadas And I mean, okay,

600
00:28:20,880 --> 00:28:23,320
Speaker 2: it depends like if you're in a good, solid relationship,

601
00:28:23,320 --> 00:28:26,600
Speaker 2: maybe you've decided to establish a family trust together, Like

602
00:28:26,680 --> 00:28:29,199
Speaker 2: you might not just be protecting assets from your partner,

603
00:28:29,560 --> 00:28:33,920
Speaker 2: but it's also a way that I have used historically

604
00:28:34,200 --> 00:28:37,920
Speaker 2: for my personal financial advice clients when I had them

605
00:28:38,320 --> 00:28:42,200
Speaker 2: to protect their assets. So good example of that young

606
00:28:42,280 --> 00:28:47,280
Speaker 2: girl client gets a very big inheritance from a grandmother

607
00:28:47,360 --> 00:28:50,240
Speaker 2: that passed away, talking about a couple of million dollars.

608
00:28:50,880 --> 00:28:53,520
Speaker 2: She was really worried about how that might come into

609
00:28:53,560 --> 00:28:56,240
Speaker 2: play if she met someone, got a boyfriend, got a partner,

610
00:28:56,280 --> 00:28:57,960
Speaker 2: if it was just sitting in her bank account, or

611
00:28:58,160 --> 00:29:00,880
Speaker 2: these shares were just in her personal name. So she

612
00:29:01,000 --> 00:29:03,160
Speaker 2: was single at the time she came to me. We

613
00:29:03,200 --> 00:29:06,480
Speaker 2: did a whole heap of tax planning with her accountant,

614
00:29:06,840 --> 00:29:09,680
Speaker 2: with me, We set up a family trust. We got

615
00:29:09,720 --> 00:29:12,120
Speaker 2: all of that established so that if ever she got

616
00:29:12,120 --> 00:29:16,760
Speaker 2: into a relationship, that wouldn't come into play. Yeah, so

617
00:29:16,800 --> 00:29:19,440
Speaker 2: we could say no, sorry, like that's in a family trust.

618
00:29:19,480 --> 00:29:21,600
Speaker 2: It's actually locked and loaded away from you. You can't

619
00:29:21,600 --> 00:29:23,760
Speaker 2: get half of her inheritance if you break up with her.

620
00:29:23,880 --> 00:29:25,480
Speaker 4: Wow, that's actually very good.

621
00:29:25,360 --> 00:29:27,440
Speaker 2: Right, And I feel like sometimes we need those tangible

622
00:29:27,440 --> 00:29:30,960
Speaker 2: examples to go. Yeah, asset protection what does that even mean? Beck, Like,

623
00:29:31,280 --> 00:29:34,320
Speaker 2: what is asset protection? No one gets into a relationship

624
00:29:34,360 --> 00:29:37,120
Speaker 2: being like I adore this person, can't wait for them

625
00:29:37,120 --> 00:29:40,360
Speaker 2: to screw me over later, Yes, like no one does that. No,

626
00:29:40,640 --> 00:29:43,360
Speaker 2: but like plan for the worst, expect the best. Exactly,

627
00:29:43,440 --> 00:29:44,920
Speaker 2: you just got to be safe. And it doesn't mean

628
00:29:45,120 --> 00:29:47,560
Speaker 2: it doesn't mean that you think the person's dodgy. It's

629
00:29:47,680 --> 00:29:50,800
Speaker 2: just you know, you're thinking about yourself. So exactly what

630
00:29:51,040 --> 00:29:53,840
Speaker 2: are the cons in this case? So there are obviously

631
00:29:54,040 --> 00:29:56,840
Speaker 2: a few, and it's not all sunshine and roses. When

632
00:29:56,880 --> 00:29:58,520
Speaker 2: it comes to a family trust, you do have to

633
00:29:58,560 --> 00:30:01,760
Speaker 2: really think about whether you want one. Some people want

634
00:30:01,800 --> 00:30:06,680
Speaker 2: them because they're planning on creating wealth. So I've had

635
00:30:06,880 --> 00:30:10,840
Speaker 2: clients set them up who have regular jobs, like one

636
00:30:11,160 --> 00:30:13,960
Speaker 2: seventy grand, the other earn one hundred grand, Like I

637
00:30:14,000 --> 00:30:17,880
Speaker 2: would say, that's a relatively regular income for a family,

638
00:30:18,280 --> 00:30:21,040
Speaker 2: And they set it up because their intention was to

639
00:30:21,240 --> 00:30:24,760
Speaker 2: aggressively invest to retire early. And they were like, actually,

640
00:30:24,800 --> 00:30:27,160
Speaker 2: we want to create this into family wealth. We're really

641
00:30:27,160 --> 00:30:29,680
Speaker 2: committed to this plan, and we want to set up

642
00:30:29,760 --> 00:30:33,520
Speaker 2: a trust so that when we start investing, we're starting

643
00:30:33,560 --> 00:30:37,160
Speaker 2: to invest inside that trust for our set protection reasons.

644
00:30:37,600 --> 00:30:39,840
Speaker 2: We're happy with all the fees and charges because literally

645
00:30:39,880 --> 00:30:42,440
Speaker 2: we're sending like sixty percent of our income to these shares,

646
00:30:43,000 --> 00:30:46,640
Speaker 2: and we don't want to have to transfer the shares

647
00:30:46,760 --> 00:30:50,400
Speaker 2: once they're established into a trust, because if you transfer

648
00:30:50,520 --> 00:30:53,920
Speaker 2: something usually you will have to pay stamp duty, so

649
00:30:53,960 --> 00:30:56,120
Speaker 2: you'll have to pay some taxes or you have to

650
00:30:56,160 --> 00:30:58,880
Speaker 2: pay some amounts that would be too much, So they'd

651
00:30:58,880 --> 00:31:01,240
Speaker 2: thought about it. That was their plans, but set up

652
00:31:01,280 --> 00:31:05,160
Speaker 2: costs a lot above and beyond the financial advice you

653
00:31:05,240 --> 00:31:08,160
Speaker 2: might need to get. It can cost anywhere between one

654
00:31:08,160 --> 00:31:10,760
Speaker 2: thousand and five thousand dollars to set up a family trust,

655
00:31:11,240 --> 00:31:15,120
Speaker 2: plus then annual admin fees and accounting fees, which I

656
00:31:15,120 --> 00:31:17,760
Speaker 2: would say on average range between one thousand and three

657
00:31:17,760 --> 00:31:21,360
Speaker 2: thousand dollars a year. So it's definitely not an option

658
00:31:21,400 --> 00:31:24,200
Speaker 2: that you go, oh, just set it up, one and done.

659
00:31:24,480 --> 00:31:28,160
Speaker 2: Like there's ongoing admin costs and expectations.

660
00:31:28,320 --> 00:31:30,120
Speaker 4: I see that's where the rich family.

661
00:31:30,480 --> 00:31:34,080
Speaker 2: Yeah, that's why they're usually reserved for the wealthier because like,

662
00:31:34,160 --> 00:31:37,480
Speaker 2: let's be honest, who is spending three thousand dollars a

663
00:31:37,600 --> 00:31:41,600
Speaker 2: year on an asset if it doesn't super financially benefit you. Yeah,

664
00:31:41,640 --> 00:31:45,280
Speaker 2: they're a bit complex. So family trusts sign exactly like

665
00:31:45,320 --> 00:31:48,800
Speaker 2: a little DIY option. You do need an accountant or

666
00:31:48,840 --> 00:31:51,239
Speaker 2: a lawyer to help you manage it long term, and

667
00:31:51,600 --> 00:31:54,160
Speaker 2: there are relatively strict rules to follow, so you can't

668
00:31:54,200 --> 00:31:55,720
Speaker 2: dip in and dip out, like it's not like a

669
00:31:55,760 --> 00:31:59,520
Speaker 2: savings account. Over to the side, and then I would say,

670
00:31:59,560 --> 00:32:03,280
Speaker 2: eighty eero scrutiny like tax man is all over it,

671
00:32:03,440 --> 00:32:07,320
Speaker 2: like the tax office is all over family trusts to

672
00:32:07,400 --> 00:32:09,920
Speaker 2: make sure that they're not being used for tax dodging.

673
00:32:10,280 --> 00:32:13,480
Speaker 2: Oh like, because people might set them up and be like, oh,

674
00:32:13,520 --> 00:32:16,880
Speaker 2: this is so smart, I'm going to distribute it. They

675
00:32:16,920 --> 00:32:19,920
Speaker 2: aren't silly, and with the rise of like data matching,

676
00:32:20,040 --> 00:32:22,800
Speaker 2: they're getting better at calling out like that's a dodgy

677
00:32:22,800 --> 00:32:25,760
Speaker 2: family trust. Happens all the time, so you do have

678
00:32:25,800 --> 00:32:28,080
Speaker 2: to play by the rules. It's not like, oh, set

679
00:32:28,120 --> 00:32:29,560
Speaker 2: this up and you could be a little bit sneaky,

680
00:32:29,920 --> 00:32:31,360
Speaker 2: No sir, that's not going to happen.

681
00:32:31,520 --> 00:32:33,760
Speaker 4: No. So if you say, for example, have like three

682
00:32:33,800 --> 00:32:35,360
Speaker 4: thousand dollars, like you go to this thirty I don't

683
00:32:35,360 --> 00:32:36,800
Speaker 4: know why, I don't know. I pulled that out to

684
00:32:37,000 --> 00:32:40,520
Speaker 4: shares and then each year you have a thousand dollars profit. Yeah,

685
00:32:40,560 --> 00:32:43,080
Speaker 4: can you put that thousand dollars profit just back into

686
00:32:43,120 --> 00:32:44,480
Speaker 4: the shares in your.

687
00:32:44,600 --> 00:32:46,720
Speaker 2: You could, but there might be a roundabout way of

688
00:32:46,760 --> 00:32:49,080
Speaker 2: going about it. So again, I'm not an accountant or like,

689
00:32:49,280 --> 00:32:52,280
Speaker 2: let's say you left it in the account and said

690
00:32:52,280 --> 00:32:54,520
Speaker 2: I just want it to be reinvested. It will be

691
00:32:54,560 --> 00:32:56,840
Speaker 2: taxed at forty five years. The profit will be taxed

692
00:32:56,840 --> 00:32:59,800
Speaker 2: at for a profit will be Yeah, I might say that, Beck,

693
00:33:00,080 --> 00:33:03,760
Speaker 2: you pay thirty cents tax, so let's distribute it to you. Yeah,

694
00:33:03,760 --> 00:33:05,240
Speaker 2: So I'm going to put the money into your account,

695
00:33:05,360 --> 00:33:06,920
Speaker 2: We're going to do your tax return, we're going to

696
00:33:06,960 --> 00:33:09,320
Speaker 2: declare the money. Then we're going to put some of

697
00:33:09,360 --> 00:33:11,640
Speaker 2: that money back into the trust. Okay, that would make

698
00:33:11,640 --> 00:33:13,240
Speaker 2: sense because I'm like, you're struggling to know why that

699
00:33:13,280 --> 00:33:16,200
Speaker 2: would be beneficial if all the money are earning on shares.

700
00:33:16,240 --> 00:33:20,480
Speaker 2: You know, But are there any times where like it

701
00:33:20,600 --> 00:33:23,560
Speaker 2: might actually not be worth it, like when it's not

702
00:33:23,600 --> 00:33:26,280
Speaker 2: like a one size fits all approach. Yeah, Okay, it's

703
00:33:26,280 --> 00:33:29,760
Speaker 2: definitely not. So I would say that family trusts aren't

704
00:33:29,800 --> 00:33:32,280
Speaker 2: a good plan if you're just starting out your finance journey.

705
00:33:32,360 --> 00:33:34,280
Speaker 2: Like if you're just on the start of your journey

706
00:33:34,760 --> 00:33:37,680
Speaker 2: or you don't have heaps of assets, Like I would

707
00:33:37,760 --> 00:33:41,240
Speaker 2: just be like, there is literally no point, and I

708
00:33:41,320 --> 00:33:44,600
Speaker 2: mean that not in an offensive way. Just why would

709
00:33:44,600 --> 00:33:46,880
Speaker 2: you spend the money? Yeah, Like it's a waste of

710
00:33:46,920 --> 00:33:50,320
Speaker 2: money because if the setup costs and the admin costs

711
00:33:50,360 --> 00:33:54,600
Speaker 2: outweigh the benefits, like for example, there's low or no

712
00:33:54,760 --> 00:33:58,120
Speaker 2: income generating assets and no need for tax planning, like

713
00:33:58,280 --> 00:34:00,640
Speaker 2: why would you do it? And then for people with

714
00:34:00,720 --> 00:34:04,840
Speaker 2: relatively simple financial situations, so I guess those without kids

715
00:34:05,120 --> 00:34:09,080
Speaker 2: or dependents at all or major assets, like, there's likely

716
00:34:09,480 --> 00:34:12,480
Speaker 2: easier ways to manage your money. Yeah, Like it does

717
00:34:12,560 --> 00:34:14,160
Speaker 2: get a little bit complex. Do you want to go

718
00:34:14,160 --> 00:34:17,520
Speaker 2: through a couple of situations? Yeah, Placulate examples are the

719
00:34:17,520 --> 00:34:22,440
Speaker 2: best way to learn. So let's say single, young professional.

720
00:34:22,520 --> 00:34:25,359
Speaker 2: Let's pretend beck single, you don't have a lot of

721
00:34:25,520 --> 00:34:28,640
Speaker 2: investments yet, it's probably not worth it yet. I would

722
00:34:28,680 --> 00:34:31,959
Speaker 2: say focus on building some wealth first. You're a small

723
00:34:31,960 --> 00:34:34,960
Speaker 2: business owner, like you've just started your own business, but

724
00:34:35,120 --> 00:34:37,640
Speaker 2: you're planning on making some bigger profits, Like you're not

725
00:34:37,680 --> 00:34:40,319
Speaker 2: planning on just you know, doing some local markets and

726
00:34:40,360 --> 00:34:42,359
Speaker 2: calling it a day. There, like you're planning on, like

727
00:34:42,400 --> 00:34:46,240
Speaker 2: scaling this business at some point could potentially be worth it,

728
00:34:46,320 --> 00:34:50,440
Speaker 2: because I would say protecting those assets is really smart,

729
00:34:50,520 --> 00:34:54,000
Speaker 2: and then distributing the profits to you could be helpful. Yeah,

730
00:34:54,280 --> 00:34:56,520
Speaker 2: let's say you've had a couple of kids beck with Jess,

731
00:34:56,719 --> 00:34:59,239
Speaker 2: and then you break up sorry, and then you meet

732
00:34:59,239 --> 00:35:02,280
Speaker 2: someone else and they kids and you've become a blended

733
00:35:02,280 --> 00:35:05,040
Speaker 2: family cute before you broke up with Jess, like you

734
00:35:05,120 --> 00:35:07,520
Speaker 2: built some wealth with her. Could be really good for

735
00:35:07,600 --> 00:35:08,600
Speaker 2: protecting your assets.

736
00:35:08,719 --> 00:35:08,919
Speaker 4: Yep.

737
00:35:08,960 --> 00:35:13,480
Speaker 2: What about like parents with adult kids, It could be

738
00:35:13,560 --> 00:35:18,040
Speaker 2: really good for parents with adult kids to set up

739
00:35:18,080 --> 00:35:20,600
Speaker 2: a trust so that they can distribute wealth to their

740
00:35:20,680 --> 00:35:23,919
Speaker 2: kids before an inheritance happens. A lot of people who

741
00:35:23,960 --> 00:35:28,279
Speaker 2: have wealth are now looking at it in wanting to

742
00:35:28,320 --> 00:35:31,279
Speaker 2: see that wealth spent by the younger generation instead of

743
00:35:31,280 --> 00:35:34,479
Speaker 2: waiting until they're dead. Yeah, and they're kind of like, ah, Beck,

744
00:35:34,520 --> 00:35:36,879
Speaker 2: I would actually like to see you purchase your first time.

745
00:35:36,920 --> 00:35:38,880
Speaker 2: I would actually like to see you, you know, be

746
00:35:38,920 --> 00:35:41,120
Speaker 2: able to set your kids up instead of waiting for

747
00:35:41,120 --> 00:35:43,200
Speaker 2: me to die and then getting access to an inheritance.

748
00:35:43,480 --> 00:35:45,680
Speaker 2: That's a good way to do it. And then like

749
00:35:45,880 --> 00:35:49,520
Speaker 2: maybe a couple with minimal assets, I would probably say

750
00:35:49,560 --> 00:35:52,200
Speaker 2: it might not be worth the cost unless they have

751
00:35:52,480 --> 00:35:56,200
Speaker 2: heaps more to protect. Okay, so I feel like the

752
00:35:56,200 --> 00:35:57,920
Speaker 2: best thing you can do is probably talk to a

753
00:35:57,960 --> 00:35:58,920
Speaker 2: finance professional.

754
00:35:59,160 --> 00:36:01,759
Speaker 4: Yes, I see. So let's say someone's listened to this

755
00:36:01,800 --> 00:36:03,800
Speaker 4: full episode and Things of Trust actually might be a

756
00:36:03,840 --> 00:36:06,880
Speaker 4: good idea for the situation. What's the first step? Like,

757
00:36:06,880 --> 00:36:08,719
Speaker 4: how do you actually get started? How do you set

758
00:36:08,800 --> 00:36:10,280
Speaker 4: up a trust? How do you set up a trust?

759
00:36:10,440 --> 00:36:12,480
Speaker 2: You talk to your accountant. You can also speak to

760
00:36:12,480 --> 00:36:14,800
Speaker 2: a financial advisor. And the first thing I want you

761
00:36:14,880 --> 00:36:17,000
Speaker 2: to do is not just say I want to trust,

762
00:36:17,080 --> 00:36:18,759
Speaker 2: but can you just tell me if it's worth it

763
00:36:18,800 --> 00:36:20,440
Speaker 2: for me? Like can you do a pros and cons

764
00:36:20,440 --> 00:36:23,319
Speaker 2: list for me? Personally? Any good accountant will be like

765
00:36:23,360 --> 00:36:25,200
Speaker 2: say less Beck, come in for a coffee and we'll

766
00:36:25,200 --> 00:36:27,120
Speaker 2: do a pros and cons list on the table, and

767
00:36:27,280 --> 00:36:30,880
Speaker 2: like put your personal situation right in there, like listening

768
00:36:30,920 --> 00:36:34,319
Speaker 2: to a podcast. Great for base level education, great for

769
00:36:34,440 --> 00:36:37,359
Speaker 2: understanding the concept. I cannot tell you what the right

770
00:36:37,400 --> 00:36:40,160
Speaker 2: situation is for you, but an accountant can. Yes, financial

771
00:36:40,160 --> 00:36:43,719
Speaker 2: advisor could do the same thing. If you decide to

772
00:36:43,800 --> 00:36:46,959
Speaker 2: set up a trust, it's very simple. But it's also

773
00:36:46,960 --> 00:36:50,000
Speaker 2: a lot of signatures. There's a lot of paperwork, and

774
00:36:50,040 --> 00:36:52,600
Speaker 2: that's fine. I used to actually hate setting up trusts

775
00:36:52,640 --> 00:36:55,640
Speaker 2: for clients because we're talking eighty plus pages of a

776
00:36:55,640 --> 00:36:58,440
Speaker 2: trusteed that you need to print or get signed, have

777
00:36:58,520 --> 00:37:01,319
Speaker 2: them initial so many different Like, it's just an ad

778
00:37:01,360 --> 00:37:04,200
Speaker 2: midnightmare for me, not for you. If you're the client, beg,

779
00:37:04,760 --> 00:37:06,520
Speaker 2: I do all of the printing, I do all of

780
00:37:06,520 --> 00:37:08,839
Speaker 2: the scanning. I organize that and I put those little

781
00:37:08,840 --> 00:37:11,360
Speaker 2: sticky labels on that say sign here, and then I

782
00:37:11,440 --> 00:37:13,640
Speaker 2: give you a coffee and be like, hope your pen's ready,

783
00:37:13,640 --> 00:37:15,520
Speaker 2: and then you have to sign a heap of times. Okay,

784
00:37:15,560 --> 00:37:18,319
Speaker 2: it's fine, but the accountant will set that up. They'll

785
00:37:18,360 --> 00:37:21,040
Speaker 2: register it with the ATO and set it up in

786
00:37:21,080 --> 00:37:22,680
Speaker 2: the same way that they would have business. So you

787
00:37:22,760 --> 00:37:26,320
Speaker 2: need to name your trust. So one piece of advice

788
00:37:26,360 --> 00:37:28,200
Speaker 2: I have is that if you are ever setting up

789
00:37:28,200 --> 00:37:31,960
Speaker 2: a family trust, never use your name. Oh so I

790
00:37:32,000 --> 00:37:34,920
Speaker 2: would never say becksiy Ed's family trust. Okay, Like, if

791
00:37:34,960 --> 00:37:37,000
Speaker 2: you're telling me that it's for asset protection and you

792
00:37:37,000 --> 00:37:40,600
Speaker 2: don't want people to find it, don't put on your name. Yeah,

793
00:37:40,640 --> 00:37:43,560
Speaker 2: you can call it anything, though, and I won't tell

794
00:37:43,560 --> 00:37:46,920
Speaker 2: you what my client's trust names were, but like there

795
00:37:47,000 --> 00:37:48,400
Speaker 2: were some funny ones.

796
00:37:48,800 --> 00:37:50,080
Speaker 4: Yeah, okay, Like I had a.

797
00:37:50,040 --> 00:37:52,080
Speaker 2: Client and it was similar but not this name, but

798
00:37:52,120 --> 00:37:55,440
Speaker 2: it was like they were a very conservative investor and

799
00:37:55,480 --> 00:37:58,360
Speaker 2: they called their trust money for bitcoin and it was

800
00:37:58,480 --> 00:38:01,840
Speaker 2: very funny. Yeah, So things like you can name it anything,

801
00:38:01,960 --> 00:38:05,680
Speaker 2: just please don't use your name, like you want to

802
00:38:05,760 --> 00:38:08,239
Speaker 2: separate it from you. Yea, that doesn't mean you don't

803
00:38:08,239 --> 00:38:11,960
Speaker 2: own it, but like anything, name it a past pet,

804
00:38:12,280 --> 00:38:14,200
Speaker 2: name it like the name of the street that you

805
00:38:14,239 --> 00:38:16,600
Speaker 2: grew up on. I don't care. Just don't make it

806
00:38:16,640 --> 00:38:19,719
Speaker 2: your family name. And when you're choosing your trust name,

807
00:38:19,719 --> 00:38:22,840
Speaker 2: you'll also choose a trustee, so it might be a

808
00:38:22,920 --> 00:38:25,279
Speaker 2: company or it might be an individual, and then you're

809
00:38:25,280 --> 00:38:28,640
Speaker 2: also going to pick all your beneficiaries. The trusteed needs

810
00:38:28,640 --> 00:38:31,399
Speaker 2: to be drafted by a lawyer. There are places that

811
00:38:31,480 --> 00:38:34,920
Speaker 2: do them automatically, so like there are actual trusteed lawyers

812
00:38:34,920 --> 00:38:37,399
Speaker 2: that basically have a cut paste trusteed. If you want

813
00:38:37,400 --> 00:38:39,120
Speaker 2: the bare minimum, you can get that. I think we

814
00:38:39,239 --> 00:38:41,320
Speaker 2: used to pay like four hundred bucks for a trusteed

815
00:38:41,680 --> 00:38:43,960
Speaker 2: from one of these companies. But if you want any

816
00:38:43,960 --> 00:38:46,000
Speaker 2: bells and whistles. You need to sit down with an

817
00:38:46,040 --> 00:38:49,160
Speaker 2: individual lawyer to get that written up, and then you

818
00:38:49,239 --> 00:38:51,080
Speaker 2: just need to pay all of the setup costs and

819
00:38:51,120 --> 00:38:53,920
Speaker 2: register and sign all of your names away and whatnot.

820
00:38:53,960 --> 00:38:57,040
Speaker 2: And then you might also, you know, open a bank account,

821
00:38:57,080 --> 00:38:59,040
Speaker 2: but you can't open a bank account until the trust

822
00:38:59,080 --> 00:39:01,680
Speaker 2: is set up because the quote trust will set up

823
00:39:01,719 --> 00:39:04,879
Speaker 2: a bank account if you want to own money. I see, Okay,

824
00:39:04,880 --> 00:39:06,880
Speaker 2: does that makes sense? So it has to exist to

825
00:39:06,880 --> 00:39:08,240
Speaker 2: be able to set up a bank account.

826
00:39:08,280 --> 00:39:10,840
Speaker 4: I see here I'm catching myself thinking like, ooh, this

827
00:39:10,960 --> 00:39:12,759
Speaker 4: is not accessible for everyone. But I'm like, oh, if

828
00:39:12,800 --> 00:39:14,720
Speaker 4: I can't afford it, I probably don't want a family

829
00:39:14,719 --> 00:39:15,920
Speaker 4: trust or a trust station.

830
00:39:16,120 --> 00:39:18,360
Speaker 2: So we don't want to be spending money unnecessarily.

831
00:39:18,640 --> 00:39:22,000
Speaker 4: Yes, I see. So what about if you have investments

832
00:39:22,080 --> 00:39:24,360
Speaker 4: but you don't want the hassle of a family trust?

833
00:39:24,440 --> 00:39:24,760
Speaker 1: Now?

834
00:39:24,840 --> 00:39:27,879
Speaker 4: Can you transfer these things into the trust later? Yes?

835
00:39:27,960 --> 00:39:31,520
Speaker 2: You can, but again there's so many butts in this episode.

836
00:39:32,960 --> 00:39:36,880
Speaker 2: You can transfer assets, like you could transfer property or

837
00:39:36,920 --> 00:39:39,759
Speaker 2: shares into a family trust that's already been set up,

838
00:39:40,080 --> 00:39:42,520
Speaker 2: but you want to consider a few things before you do.

839
00:39:42,600 --> 00:39:44,920
Speaker 2: So you're going to need to transfer the ownership to

840
00:39:45,000 --> 00:39:47,880
Speaker 2: move them into the trust. And if you know you

841
00:39:47,920 --> 00:39:49,960
Speaker 2: want to hold these assets in a trust, it can

842
00:39:50,000 --> 00:39:53,080
Speaker 2: generally be better to purchase them directly through the trust

843
00:39:53,640 --> 00:39:56,360
Speaker 2: from the outset. And this is going to avoid stamp

844
00:39:56,400 --> 00:39:58,360
Speaker 2: duty and tax because you know how I said before

845
00:39:58,400 --> 00:40:00,319
Speaker 2: that the trust is seen in the eye of the

846
00:40:00,360 --> 00:40:04,680
Speaker 2: ATOS an individual. If you're transferring a property from Beck

847
00:40:05,120 --> 00:40:08,680
Speaker 2: to Beck's trust, the ATO is going to see that

848
00:40:08,719 --> 00:40:10,040
Speaker 2: as another individual buying it.

849
00:40:10,560 --> 00:40:10,799
Speaker 1: Yeah.

850
00:40:10,960 --> 00:40:14,560
Speaker 2: See, so if you're transferring it, stamp duty tax payable.

851
00:40:14,880 --> 00:40:17,440
Speaker 2: If the asset has increased in value, they're going to

852
00:40:17,480 --> 00:40:21,359
Speaker 2: try and get you on capital gains tax. So you've

853
00:40:21,360 --> 00:40:22,960
Speaker 2: got a way up whether it's worth it. And I

854
00:40:23,000 --> 00:40:25,279
Speaker 2: actually had a lot of clients where they would set

855
00:40:25,320 --> 00:40:26,640
Speaker 2: up a trust and be like I really want to

856
00:40:26,640 --> 00:40:29,200
Speaker 2: put my property in it, and I'd be like, no, sorry,

857
00:40:29,640 --> 00:40:33,719
Speaker 2: Like financially that's not viable. Future properties, great, we can

858
00:40:33,760 --> 00:40:36,400
Speaker 2: put that in the trust, but right now it's not

859
00:40:36,480 --> 00:40:38,799
Speaker 2: financially viable. And you just told me that you don't

860
00:40:38,800 --> 00:40:40,520
Speaker 2: want to be in this house forever, So let's just

861
00:40:40,560 --> 00:40:42,919
Speaker 2: wait until we sell that property, and then we'll never

862
00:40:42,960 --> 00:40:44,960
Speaker 2: buy one in your personal name again. We'll buy it

863
00:40:45,000 --> 00:40:47,080
Speaker 2: in the trust, But we're not going to just incur

864
00:40:47,239 --> 00:40:50,600
Speaker 2: heaps of tax just to change the names and the

865
00:40:50,640 --> 00:40:53,759
Speaker 2: ownership structure, Like it might not be worth it. But

866
00:40:54,239 --> 00:40:56,440
Speaker 2: if you set up the trust and then bought the property.

867
00:40:56,520 --> 00:40:59,120
Speaker 2: So for example, Beck, you've decided you're going to be

868
00:40:59,120 --> 00:41:01,360
Speaker 2: a property investor, know, I'm going to own heaps of

869
00:41:01,440 --> 00:41:04,560
Speaker 2: investment properties, you might want to set up a trust

870
00:41:04,600 --> 00:41:07,080
Speaker 2: first so that they're not in your personal name. They're

871
00:41:07,080 --> 00:41:10,319
Speaker 2: in your trust from the outset. But you do want

872
00:41:10,320 --> 00:41:12,320
Speaker 2: to make sure that you're chatting with an expert about

873
00:41:12,320 --> 00:41:15,000
Speaker 2: transfer costs and workout if it will be worth it,

874
00:41:15,040 --> 00:41:17,560
Speaker 2: because there were a couple of times where we did

875
00:41:17,560 --> 00:41:21,080
Speaker 2: do those transfers because it actually ended up being the

876
00:41:21,120 --> 00:41:23,719
Speaker 2: best thing for the client, Like financially, yeah, it cost

877
00:41:23,800 --> 00:41:25,520
Speaker 2: them a lot of money, but they got a lot

878
00:41:25,600 --> 00:41:28,080
Speaker 2: more asset protection, or it put them in a better position,

879
00:41:28,280 --> 00:41:30,319
Speaker 2: or you know, it might have been a rental property right.

880
00:41:30,440 --> 00:41:32,880
Speaker 2: So good example of that from way back when is

881
00:41:34,200 --> 00:41:37,920
Speaker 2: husband owned an investment property, got married, wife was a

882
00:41:37,920 --> 00:41:41,240
Speaker 2: stay at home wife, but because he owned the investment property,

883
00:41:41,320 --> 00:41:44,040
Speaker 2: all of that rental income came directly to him under

884
00:41:44,080 --> 00:41:47,760
Speaker 2: his tax return. By transferring that property into a trust.

885
00:41:47,800 --> 00:41:51,960
Speaker 2: We could distribute that profit to his wife and she

886
00:41:52,080 --> 00:41:56,000
Speaker 2: didn't work, so that was financially tax beneficial. And we

887
00:41:56,080 --> 00:41:59,319
Speaker 2: did this lack cost benefit analysis that yes, there's a

888
00:41:59,360 --> 00:42:01,840
Speaker 2: lot of up cost to doing this, but over the

889
00:42:01,840 --> 00:42:03,920
Speaker 2: long term, he had no intention of selling the property

890
00:42:03,960 --> 00:42:06,000
Speaker 2: and always renting it out. I think it was like

891
00:42:06,080 --> 00:42:08,239
Speaker 2: after eight years or something, it broke even, and then

892
00:42:08,360 --> 00:42:10,440
Speaker 2: after ten years it was like making a profit. We

893
00:42:10,480 --> 00:42:12,279
Speaker 2: did have to kind of take a step back to

894
00:42:12,320 --> 00:42:14,920
Speaker 2: take a step forward in their wealth creation journey. But

895
00:42:14,960 --> 00:42:16,719
Speaker 2: you can only work that out if you talk to

896
00:42:16,760 --> 00:42:17,600
Speaker 2: a professional course.

897
00:42:17,760 --> 00:42:19,160
Speaker 4: Yes, I mean you can close the trust.

898
00:42:19,480 --> 00:42:21,360
Speaker 2: You can close the trust if you decide it's not working.

899
00:42:21,400 --> 00:42:25,440
Speaker 2: Beautiful easy. Okay, we've actually covered so much today. I

900
00:42:25,480 --> 00:42:27,680
Speaker 2: think the biggest thing I've learned is that family trusts

901
00:42:27,760 --> 00:42:32,120
Speaker 2: aren't just some exclusive tool for the Mega Ridge. Don't

902
00:42:32,120 --> 00:42:34,080
Speaker 2: stop making the movies about the Mega Ridge.

903
00:42:34,160 --> 00:42:36,960
Speaker 4: Yes, Stone, stop making those movies. We need see, you

904
00:42:37,000 --> 00:42:38,880
Speaker 4: do need a little bit of wealth, probably more than

905
00:42:38,920 --> 00:42:41,960
Speaker 4: I have right now. But regular families can benefit from

906
00:42:41,960 --> 00:42:44,239
Speaker 4: them too, but only if it's the right fit for

907
00:42:44,320 --> 00:42:44,960
Speaker 4: your situation.

908
00:42:45,040 --> 00:42:48,640
Speaker 2: Yeah, one hundred percent, And I think importantly, And let's

909
00:42:48,719 --> 00:42:50,680
Speaker 2: leave it on. These family trusts can be a very

910
00:42:50,680 --> 00:42:53,640
Speaker 2: smart way to manage your assets or reduce some tax

911
00:42:53,760 --> 00:42:56,640
Speaker 2: or plan for the future, but they're definitely.

912
00:42:56,239 --> 00:42:57,680
Speaker 4: Not a must have item.

913
00:42:57,760 --> 00:42:59,759
Speaker 2: I think so many people when they get on too

914
00:42:59,760 --> 00:43:02,280
Speaker 2: their wealth creation journey or they start listening to the podcast,

915
00:43:02,280 --> 00:43:03,960
Speaker 2: they're like, I want to do this properly, Like I

916
00:43:04,040 --> 00:43:07,040
Speaker 2: really want to get my stuff together. I probably should

917
00:43:07,040 --> 00:43:09,520
Speaker 2: get a family trust because that's legitimate, Like it feels

918
00:43:09,520 --> 00:43:13,440
Speaker 2: full legit right, might not actually be in your best interests.

919
00:43:13,600 --> 00:43:15,319
Speaker 2: You don't have to be wealthy to set one up,

920
00:43:15,360 --> 00:43:17,600
Speaker 2: but you do have to have a very clear reason

921
00:43:17,719 --> 00:43:18,480
Speaker 2: for doing so.

922
00:43:19,239 --> 00:43:21,319
Speaker 4: And if you found this episode helpful, please share it

923
00:43:21,320 --> 00:43:23,640
Speaker 4: with someone else who might be considering a family trust.

924
00:43:23,840 --> 00:43:26,480
Speaker 2: Just gonna state the obvious. If you got this far

925
00:43:26,560 --> 00:43:28,880
Speaker 2: into the episode and you're not following us and you

926
00:43:28,960 --> 00:43:32,200
Speaker 2: haven't subscribed to this podcast, my friend, now is the time,

927
00:43:32,320 --> 00:43:36,040
Speaker 2: because it genuinely helps us so much to keep creating

928
00:43:36,080 --> 00:43:38,840
Speaker 2: content that's all about putting you in the best possible

929
00:43:38,880 --> 00:43:39,800
Speaker 2: financial position.

930
00:43:40,080 --> 00:43:44,040
Speaker 4: Gorgeous. All right, guys, we'll see you on Friday.

931
00:43:48,280 --> 00:43:50,920
Speaker 5: The advice shared on She's on the Money is generally

932
00:43:51,080 --> 00:43:54,120
Speaker 5: nature and does not consider your individual circumstances.

933
00:43:54,480 --> 00:43:55,080
Speaker 2: She's on the.

934
00:43:55,000 --> 00:43:58,560
Speaker 5: Money exists purely for educational purposes and should not be

935
00:43:58,640 --> 00:44:01,440
Speaker 5: relied upon to make an investment mean all financial decision.

936
00:44:01,840 --> 00:44:04,160
Speaker 2: If you do choose to buy a financial.

937
00:44:03,640 --> 00:44:07,959
Speaker 5: Product, read the PDS TMD and obtain appropriate financial advice.

938
00:44:07,680 --> 00:44:09,040
Speaker 2: Tailored towards your needs.

939
00:44:09,400 --> 00:44:13,320
Speaker 5: Victoria Divine and She's on the Money are authorized representatives

940
00:44:13,360 --> 00:44:15,920
Speaker 5: of money. Sheper p T y lt D A b

941
00:44:16,120 --> 00:44:19,160
Speaker 5: N three two one six four nine two seven seven

942
00:44:19,280 --> 00:44:25,800
Speaker 5: zero eight AFS L four five one two eight nine