FAQ 55 What are the steps needed to set up a Trustee/Trust

IT IS RECOMMENDED THAT A TRUST OWNS A SINGLE PROPERTY FOR ASSET PROTECTION REASONS.

IT IS FURTHER RECOMMENDED TO HAVE A SEPARATE TRUSTEE FOR EACH TRUST. NEVER MIX TRADING ENTITIES WITH INVESTMENT ENTITIES 

Before commencing a Trustee/Trust set up the investor needs to choose whether to have a piggy bank trust or not. If a piggy bank trust is chosen then set this up FIRST

The order of setup is governed by the response to questions asked when setting up the component parts of your structures. For example when setting up a trust there is a question about the Trustee name. Therefore the Trustee must be set up BEFORE the Trust. In a similar vein when setting up the Trustee there is a question about the names of the shareholders. If using a Piggy Bank Trust then this should be set up BEFORE any Trustee or Trusts are set up otherwise  extra work will be needed to amend existing Trustee shareholder details.

The following spreadsheet describes all of the various functions and terms used when considering setting up Trustee Companies and Trusts.

DOWNLOAD THIS SPREADSHEET TO ASSIST YOU 

************Perform the steps in the order listed below************************************

1) PIGGY BANK TRUST SETUP (Skip this step if not using a piggy bank trust)

• Be sure that this trust can distribute to \’Associated Entities\’
• Choose an uncomplicated name for the trust. It is recommended to use abstract names ie. Alpha Trust Not Piggy Bank Trust or Venture Trust or anything which suggests a business like operation or a street name. Lenders viewing \”big note\” names will want loans to come under their business lending rates and LVR\’s
• Choose an appointer/s – this is a powerful position so choose wisely.
• Choose a settlor – this cannot be a relative or anyone who  could benefit from the trust. Make sure that the settled sum is not invoiced as this will invalidate the trust.
• Choose the beneficiary/ies – yes these still need to be specified even though there may be no distributions.
• Employ an accountant or lawyer to set up this trust making sure that the trustee/s are personal( no corporate trustee for this trust) A piggy bank trust ALWAYS has a personal trustee ie a real persons name. If this person was Bill Smith and he named the piggy bank trust The PB Trust, the full name for the bank account would be Bill Smith ATF The PB Trust
• If it is intended to use this trust to purchase equities on the stock market or buy gold etc then get a TFN and ABN. Also refer to FAQ 27 on how to set up a bank account specifically for this trust.

2) TRUSTEE SETUP

•  Choose at least 3 uncomplicated names for the company. Remember that these MUST be unique. It is recommended that you use abstract names ie. Delta Pty Not ABC Developments Pty Ltd or XYZ Ventures Pty Ltd or anything which suggests a business like operation or a street name. Lenders viewing \”big note\” names will want loans to come under their business lending rates and LVR\’s
•  Note down the piggy bank trust details if using a piggy bank trust and supply these as the shareholder name.NOTE The Piggy bank trustee name will be provided as the shareholder as a trust is not a legal entity. (If not using a piggy bank trust then supply the shareholder name/s – these are normally the director name/s and the number of shares that each shareholder will be issued with. This is normally one per director)
•  Note down the director/s names
•  Note down the business address for the company.( a real address is required)
•  Note down the addresses of all directors.
•  Employ an accountant or lawyer to setup this trustee company.
•  After the company is registered with ASIC an ACN will be issued. The ACN and Company name will be needed for the trust setup.
• Also refer to FAQ 27 on how to set up a bank account with this Trustee ATF the Trust.

3) TRUST SETUP (Investment, Consultancy, Flipper)

• Be sure that this trust can distribute to \’Associated Entities\’
• Choose an uncomplicated name for the trust. It is recommended to use abstract names ie. Alpha Trust. Not Venture Trust or anything which suggests a business like operation.(unless you intend to run a business in the trust).  It is recommended to not use the same name as the trustee name – it will be confusing. Do not choose a street name. If reusing the trust at a later time it will be confusing. Lenders viewing \”big note\” names will want loans to come under their business lending rates and LVR\’s
• Choose an appointer/s – this is a powerful position so choose wisely.
• Choose a settlor – this cannot be a relative or anyone who could benefit from the trust. Make sure that the settled sum is not invoiced as this will invalidate the trust.
• Choose the beneficiary/ies – remember to name only those required as relatives are automatically included in a FAMILY TRUST.
• Specify the Trustee name and ACN obtained in the previous step.
• Decide if the trust is to be registered for GST.
• Employ an accountant or lawyer to setup this trust.
• After the setup has been completed the trust deed may need to be stamped depend ant on the state of registration.
• Ask the accountant to apply for an ABN for the TRUST and at the same time apply for a TFN for the TRUST. If the trust is to be registered for GST then have this done. This would most certainly be the case for a consultancy trust turning over more than $75k, a flipper trust getting involved in developing and an investment trust owing commercial property and turning over more than $75k.
• PLEASE NOTE

The ABN and TFN will be delivered to the Trustee TO USE ON BEHALF OF THE TRUST when submitting end of year tax returnsThe ATO will address their official documents   –    \’THE TRUSTEE FOR XYZ Trust\’  The trustee should only have and ACN does not need an ABN and TFN for itself as it DOES NOT TRADE 

If setting up the PIGGY BANK trust after setting up your Trustees and Trusts an amendment will have to be made to the shareholder details of the trustee companies. This is done through ASIC.  A form 484 will need to be submitted. Refer to \’Changing the member register\’ pages 45-49 of the download obtained from the following link.

/instructions-for-changing-your-company-details-online/

Regards
Michael & Sara
Ultimate Coaches

The information supplied is general only and not intended to replace professional advice. As coaches we do not provide advice on what or where to buy or to assess the suitability of a property. We advise students to perform their own due diligence when considering a property purchase.