Of course none of us want to sign surety for someone or something else’s debt, but there are times when it is unavoidable. Typically, you would have to sign surety for – Your company’s overdraft facility Your company’s leases and instalment sale agreements Your trust’s property company’s mortgage bond agreements All of the above are unavoidable and are not too onorous. After all, you’ve protected your growth assets against your possible bankruptcy by holding them in a trust so if the surety is called and you go bankrupt as a result, well, at least the trust assets are safe (except,…
Trusts and Estate Planning
Some advisors will tell you that you can use trusts to save loads of tax by “income splitting”. Here’s how it works – Instead of leaving the income in the trust and paying 40% (now 45%) income tax, the income is awarded to beneficiaries (before the end of February) and will be taxed in their hands at their marginal tax rate. If their rate is low, then the tax saving is significant. Yes, this is sometimes the right way to go, but normally we would want to keep the income in the trust and use it to build its investments…
I recently wrote a post called By all means copy me Now I’m going to get quite specific. We are talking about so called professionals here. “Professional” attorneys and accountants who have no principals and no pride and bring their peers into disrepute. I have in front of me two trust deeds. One prepared and sold to their client by a banking institution (let’s call it the “mother”) and another by an accountant (let’s call it the “child”). I received the child for review first and after a read through, decided that it was such rubbish that I could not…
There are two principle reasons for forming a family trust (known as an inter vivos trust because it is formed during your lifetime). Firstly, the trust is a valuable estate planning tool as when you die, the trust does not die, so there is no Estate Duty payable on the trust assets and no CGT event. Secondly, the assets of a well formed and administered trust cannot be attacked by your creditors in the event of your bankruptcy. This diagram demonstrates both uses of the discretionary trust. Note that since this article was published, CGT for individuals has increased t…