Reasons to Set Up a Trust to Buy Your Property

When you purchase a property, you can buy it in your personal name, a company name or even a trust.  The trust must be set up before hand and have a trustee to manage the trust (which could be yourself or a company you own).  Now, why should you undertake a complex procedure like this to buy a property? Well, there are several reasons why savvy investors do this and here are some of them that can help you decide whether you too should follow this strategy.

Asset protection

This is one of the top reasons why people opt for a trust to buy and hold their properties. The assets held by the trust are safe even if you have to declare personal bankruptcy. This means that your creditors can create a lien on your personal assets but not on those held through the trust. The property cannot be taken over in lieu of your debts by any creditor. Of course, there are conditions that apply, namely that the property should have been purchased via the trust a specific number of years before your bankruptcy situation. If you want to make sure that the property is protected for your future generations, this advantage makes a trust a good choice for you.

Fewer complexities in transfer

A trust makes it easy for you to ensure that the property passes on to your heirs quickly and without legal complexities in the event of your death. This is one good reason to consider if you expect someone to challenge the claim of your heirs to your assets in particular. Buying and holding your property through the trust makes your stance clear on what you want to be done with the property, and the procedure for transfer of rights is clear cut too with a trust.

Tax benefits

Of course, the tax benefits are a big plus point for buying and holding property via a trust. It may be possible to avoid a big chunk of taxes including capital gains and stamp duty when the property passes to someone within your family, provided it is held in a trust. This gives a significant financial benefit to your heirs.

Please note that it is important to decide on the buying entity before signing a contract or there could be potential implications, such as stamp duty issues. We also strongly recommend that you seek the advice of an accountant regarding tax and other financial benefits regarding trusts.

If you want more information or help with buying a property via a trust, approach a professional law firm in Queensland, Australia.

 

Missing and Damaged Fixtures and Fittings

The standard contract of sale includes terms that specify that a property must be delivered to the buyer on the day of settlement in the same condition it was in on the day the contract was signed (save for ordinary wear and tear).  As a buyer this means you should do your due diligence to ensure that this is the case for the property you purchase.

A building and pest inspection, which is a normal part of the conveyancing process, will identify any major structural defects to the house, but you can take some extra steps to ensure what you think you are buying is what you actually receive.

A good tip is to conduct an inspection of the property before you sign the contract and check in careful detail exactly what condition the house is in.  There’s no harm in taking a camera and shooting lots of pictures.  Look for any holes in walls, missing pavers, cracks and especially chattels.  Chattels are the permanent fixtures of the house and should remain a part of the house as ownership changes.  Be sure to clarify exactly what fixtures are to be included with the property, such as a dishwasher, light fittings, blinds and TV aerials.

A lawyer can prepare a special condition to be inserted into the contract detailing exactly what fixtures are included in the sale if you’re in any doubt.

As part of your inspection, ensure that any fixtures are in good working order; try flicking on all the lights, turning on the taps, or starting the dishwasher quickly.  If you find something isn’t working then you should notify the seller’s agent straight away and don’t sign the contract until it’s fixed or you’ve spoken to your lawyer.

Once you’ve conducted this inspection and are satisfied with all the results and any other issues are sorted out, you can sign the contract.  A few days prior to settlement, attend the property again to conduct a pre-settlement inspection.  This is your chance to check over the property before the sale is finalised to ensure everything is as you thought it would be.

Go through the property again as you did before and check that no new damage has occurred and that none of the fixtures are missing.  Remember to check everything is still in good working order.  If you find any issues then raise them with your lawyer straight away.  Usually pre-settlement negotiations by your lawyer can sort a problem out.  If not your lawyer can advise you on your rights, any possible legal action that can be taken after settlement has occurred, or if settlement needs to be delayed.

It’s all about conducting due diligence and liaising with your lawyer to ensure that nothing creeps up on you by the time settlement comes around.

Call us at Icon Legal on (07) 3399 6006 if you would like advice about purchasing a property.