WA Setting up a Trust to protect assets gifted to my daughter

[thelawofdave]

Hi, I'm new here and seeking some advice about setting up a trust fund for my daughter to provide funds for her future that can't be touched by anybody else even in the event that she gets into a long term de-facto relationship, or marriage, that later ends and the ex-partner/husband wants to split their collective assets and take half of her fund.

My daughter is still a minor but my wife and I want to set up her with a fund that we can make regular payments to, say monthly, so that when she's 25 she will have access to a fund that could be used for something important in her life life a deposit for a house. We want to be sure that the funds can't be touched by anybody else until she has attained the age of 25.

The reason my wife and I want this to be so robust for our daughter is that we have a friend, a single mother of 2, who already owned a house before she met her husband, who pretty much had no assets when they got married. They were only married for about 5 years, in which they had their 2 kids, and when the second child was only about 2 the marriage broke-down and came to an end, and the husband demanded a 50-50 split of the assets, so the mother (our friend) had to sell her house and give her ex-husband half the money. He then took off overseas back to his country of birth and cried poverty so that he does'nt even have to pay maintenance for his kids....basically he's a real piece of work.

It's this type of situation, and that type of person, which my wife and I want to protect our daughter from with respect to a future fund for her.

I've gone and spoken to our bank but they have said they only offer some fairly standard kids trust accounts in which the trust assets, when they go to the beneficiary (the child) when they reach maturity, could still be subject to asset splitting in the event of a broken de-facto relationship or marriage. The bank said that my particular requirement would need specialist legal advice/assistance to set up.

So that's what I'm seeking advice about here. Can anybody offer any advice please?

 

[Docupedia]

Sounds like a pretty bog standard family discretionary trust. Any commercial solicitor can create one. Picking a trustee is necessary - many people incorporate a company for this purpose.

The difficulty will lay in the Australian family law system which can often look right past corporate and trust structures. And that’s not just a question if the law now, but crystal balling to what it may be like at the time when it’s needed (I.e. your daughter has grown up, and is going through a potential relationship split up).

You should also see an accountant for specific tax advice on the structuring.

 

[Tim W]

It's do-able.
But beyond that, lawyers can't give financial advice.

Doc (who, by his own disclaimer, is not a lawyer)
is in the right ballpark however.
What you want to do, in lawyer-speak, is to keep assets out the asset pool
of her and any future estranged spouse.

Obviously, a BFA before any marriage, and suitably prepared wills (yes, plural, yours as well as yours and he rmother's) are also going to be necessary.
You don't want any leak-out of capital through, say, a partial intestacy, because of a false economy DIY will.

You'll also need tax advice about the implications of things like interest received on the money,
and any impact it may have on her (or, indeed, your) future assets and income test positions,
in respect of government benefits.

 

[thelawofdave]

It's do-able.
But beyond that, lawyers can't give financial advice.

Doc (who, by his own disclaimer, is not a lawyer)
is in the right ballpark however.
What you want to do, in lawyer-speak, is to keep assets out the asset pool
of her and any future estranged spouse.

Obviously, a BFA before any marriage, and suitably prepared wills (yes, plural, yours as well as yours and he rmother's) are also going to be necessary.
You don't want any leak-out of capital through, say, a partial intestacy, because of a false economy DIY will.

You'll also need tax advice about the implications of things like interest received on the money,
and any impact it may have on her (or, indeed, your) future assets and income test positions,
in respect of government benefits.

Thanks for the advice Docupedia and Tim W. So it essentially sounds like I need to do the following:

1. Engage a Commercial Solicitor for the following purposes:
* Setting up a Family Discretionary Trust, the solicitor should be able to guide me through the setting up of a Company to act as the trustee;
* Setting up my will and my wife's will to ensure that the assets vested in the trust and intended for our daughter are kept out of her name and remain within the trust until she reaches the required age to receive them, even in the event of my and/or my wife's death.

2. Engage an Accountant or Tax Adviser for advice on the tax implications for interest earned on the trust moneys and any other potential implications in terms of income/asset tests, government benefits, etc, for how the earnings, or the actual trust moneys, will be viewed in terms of ownership of said interest earnings and trust moneys.

Does this sound about right? Would there be a preferable order for engaging the above mentioned professionals, i.e. the solicitor first, then the accountant/tax adviser? Is there anything else I might need to be aware of or consider with any of this?

 

[Tim W]

Pretty much any GP solicitor can do it.
You don't always and automatically need a hard core big-5 commercial specialist.

You want a Certified Practicing Accountant (CPA), or a Chartered Accountant (CA).
Both equally good. Lots of them are also Chartered Tax Advisers (you want this).
This is not a job for some chap who does pop-up tax returns in your local mall.

It won't be be cheap. But look at the value of what you're protecting.