Any consideration of a Family Trust also is also likely to involve a consideration of gift duty. Gift duty is really quite simple. It will be applied to the extent that any gift in any period of 12 months by a single person exceeds $27,000. Thus a married couple may give up to $54,000 per annum.
Generally speaking normal family gifts for Christmas and birthdays are excluded from this consideration.
The rates of gift duty are quite modest on gifts up to about $40,000 but then begin to increase quite sharply.
Gift duties apply when assets are transferred to a Family Trust. In most cases people establishing a Trust will want to transfer reasonably substantial assets to the Trust.
To achieve this therefore a legal device, which is something of a fiction, has to be set in
Thus if a husband and wife owned say a beach house worth $150,000.00 which is being transferred to the Trust with a mortgage back to them, then they can each gift $27,000.00 - a total of $54,000.00 - of the mortgage each year and complete the transaction in that way.
The first gifting can be made when the transaction is entered into so that in practise the total gifting can be completed within just over two years.
Of course if assets are in cash a Settlor may prefer simply to transfer that amount of cash each year to the trust.
There is a variety of ways to transfer assets to the Trust and I would suggest that it is a matter that will need to be discussed carefully with your lawyer and accountant.