Changing trustee of family trust to company ?

HI,
Greetings - new member here!

I have a family trust that has my wife & I as trustee's.

I run my business through the trust and also have purchased land for future developing and have a loan for the land. All in the trusts name.

I now want to put a single director company as trustee to remove my wife from any liability.

How difficult is it to do this - as I presume I have to get the loan agreement
changed and also the property title (NSW) ?

Any advice appreciated !:
Aussie

 

Hi Aussie

Can't answer your question re title transfer

I do note that you are running your business from this trust and that this trust also hold assets. The whole point of running a business from a trust would be to limit liability but this becomes somewhat ineffective if the trust starts having assets.

When I ran my business the business was run by a trust and only business 'assets' (those needed to run the business ) were held in the trust with a beneficiary of this trust my family trust and also a company that has shares held by another family trust. A little bit convoluted but what it means is that no money is left in the trust that runs the business and any profits are either distributed out to the family trust or held in another company for later distribution.

Maybe its time to sit down with a clued in accountant and work out what you can do rather than the obvious action you are contemplating. A for instance is that instead removing the wife etc you set up a new structure and move the business over to the new structure, most probably some hassles but very little statutory costs.

Cheers

 

your trust deed will likely address a change in trustee situation - look at it, what does it permit?

 

Some thoughts
1. As mentioned above, check the deed about changing trustee
2. Get legal advice on (!) - worst thing to happen would be resettlement, which could trigger stamp duty.
3. Probably too late now - But - don't hold passive assets with at risk assets in the same entity. Also mentioned above.


Can you transfer the business? This could negate the risk to the property.

 

See a lawyer to change the trustee to the company and they should also be able to handle the title transfer with no stamp (or nominal stamp of $10 or so). Lawyers should also able to deal with the bank as they will likely have their procedures in relation to a change of trustee.

This is going to cost you a few thousand in legals unfortuneatly.

There has been no beneficial change of ownership - so will be not CGT

You definitely need to keep the land in the trust and I would go so far as running your business through a seperate structure.

Don't use the company that acts as trustee of the trust.

Your accountant should be able to advise you on the preferred structure for the business.

Maybe your wife should be the sole director of the corporate trustee of the truste that will own the property (however there will be some risk associated with the development of the property - so again seek paid competent advice).

You would continue to take the risk related to the business.

Hopefully this answers your questions - it shows how important it is to have the correct structure set up from the start or not put yourself into a corner where it would be expensive to get out of it!

SM