shares and property in Trusts!

Hi does anyone here buy shares, managed funds and property in the same Hybrid Disc Trust?

Is that a good thing to do or should a separate trust be set up for both?

thanks

Triu

 

We have 2 HDT's and are probably pretty 'small time' investors. One of the HDT's invests in a residential investment property and the sharemarket (via Navra Invest) within the same trust. Neither of these investment vehicles is exposed to unmanageable risk which would affect the other.

The choice would be is it worth mitigating any potential risk (like tenant suing landlord for something that is not covered by landlord's insurance) versus around $2K per annum in trust set up and accounting fees. The answer in my case seemed to be quite clearly, no. Would depend on what you're investing in and your personal circumstances (and as Sim pointed out, your reasons for having a HDT)

Cheers
Carl

 

Tryhard,

Do you have two different corporate trustees also? Or one corporate trustee? Or are you the trustee?

I'm just hoping you're not going to say your accountant bill is $5k a year

 

Hi Glebe

We have one corporate trustee which is trustee for the 2 HDT's (long story why we ended up with 2 HDT's, we only really need one ) No our bill isn't $5K p.a, at least not for the trust bit ... all up our accounting bill is substantial (company, super fund, trusts and individuals) but well worth it given the bottom line results ... there have been days when I think the whole HDT think is just overkill and painful, but having handed over to a competent accountant it seems much more useful and worthwhile now

Cheers and Happy New Year!
Carl

 

I have been having those thoughts recently. I have been investigating a PPOR purchase, and my HDT would only get 80% whereas a lend to personal name would get 90%, this is without getting skinned with lmi.

I'm yet to see it's worthwhile, and am questioning the 3.5k or so in setup and ongoing fees.

Wondering at what point the benefits outweigh the sizeable short term negatives in purchasing in HDT structures?

 

I totally agree mate. I only raised the fees point in response to Glebe's question. I'm all for investing in competent advisors to help me through this next phase of 'the journey'. We unquestionably get great value from the money we spend and all the people we use are 'upper end' not 'price leader' types ;-)

 

Hi Insight

From memory there are some good articles by Chris Batten on the ideal structuring (http://www.chrisbatten.com.au/), and there's articles from NickM on here among others that might help.

I don't think its generally thought of as a good idea to put your PPOR in a HDT, but from the reading I did at the time I was convinced of the benefits of 'beginning with the end in mind' and using HDT for our investment activities.

Unfortunately for us I received some bad advice at the outset and the structure got way more complicated than it should have (this was in the days before discovering Navra and InvestEd etc ).

Through attending Navra seminars I was fortunate to catch a presentation by Nick Moustacas and he has since sorted our stuff out really well. I can highly recommend using Strategic Wealth (Nick's company) if you decide to bite the bullet on the HDT issue.

The advantage of going through someone like Nick is it helps clarify exactly what you're doing and why. He'll help work out if a HDT is relevant and cost-effective for your needs.

I don't think HDT's or Trust structures in general are for everyone - the benefits come into play for us because we have one higher corporate exposure / uncertain income partner in the mix, and it provides flexibility in apportioning income and expenses for the best benefit.

It is true securing funds as a HDT rather than an individual can be more challenging, but we use Rolf Latham at asapfinancial.com.au as our broker and he makes it pretty easy ;-)

Good luck with your decision ;-)
Cheers
Carl

 

To date, all our property is in personal names, and our funds are in discretionary trust. Reason - 2 fold, risk exposure and tax effectiveness.

Our current property holdings are tax effective and write off all of our tax liability.

The fund is an income of a positive nature, therefore is in a trust - for protection and tax optimisation.

In the future, we will be purchasing RE in discretionary trusts as we dont need to write off tax, and as we will be developing at some stage - asset protection. Further fund purchases will be in discretionary trust.

 

Just for another structure... I have 1 x UT and 1 x HDT. All of the property is in the UT and all equities, trading, plus non-voting shares of private companies go through the HDT. The HDT owns the sole unit of the UT. At this stage, no corporate trustees.

Apparently (and this is a big 'apparently'), this structure and the UT would allow the movement of property for superannuation purposes. Since the net cash flow is about neutral and will be for a while (and since I'm 40+ years from retiring), that hasn't been tested yet.

It may not be the ideal structure for some, but I got these setup long before I was even into investing. Luckily when I spent some time on it last year, the structure appeared to be perfect for my situation.