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Investing $150,000 for daughter for 5-7 years

Discussion in 'Managed Funds & Index Funds' started by noble383, 2nd May, 2012.

  1. noble383

    noble383 Member

    11th Jan, 2012

    I wonder if you can help me - my head is hurting thinking about all of this.

    Basically I inherited some money and want to invest $150,000 for my daughter. I want her to have it when she is 21 years of age which is in 5 years time, though she might not cash it in then and I am thinking about the best way to do this.

    I already have a family trust in place before I received the inheritance, but I am wondering which structure is best to hold the money. Through the existing family trust, a new trust with me as beneficiary (I am a 37% tax payer)

    I want to invest conservatively/balanced in some managed fund I think. I place to take some advice but I want to try and understand it first if possible. I know I could have invested in an insurance bond but think 10 years is too long......

    Any help or ideas is hugely appreciate


  2. Terryw

    Terryw Well-Known Member

    9th Jun, 2006

    You should get some legal advice as children are usually taxed at penalty rates on any income over $416 pa. One exception is for income from a will or a testamentary trust under s102AG ITAA 1936. A testamentary trust may be able to set up within 3 years of the death. This may or may not apply in this situation but if it does then your daughter could earn up to $18k pa and pay no tax.

    If you invest in your name as trustee for the daughter then you may end up paying close to 46% in tax. If you set up a discretionary trust then you need to consider a number of other issues such as getting the money to the daughter when she becomes 21 and also you need to consider the fact the the trust is discretionary so your daughter may not even get the benefit.