Hi all
Having a conversation with a mate who is expecting his first in a couple of months and he wanted to invest in shares. Catch is, he doesn't want his child knowing that they are for them (or that they exist) until he gives it to them. he wants the ability to not give it over if the child grows up to be a tosser
Is this possible? would this fall under a discretionary trust?
cheers
Why not a savings account?
savings account for children are not tax effective.
a discretionary/family trust is the way to go.
I don't think he would need to set up an actual trust. I have one savings account for my son, and the account is just "(me) in trust for (son)". Another account is in my son's name, but my wife and I are the people authorised to operate it.
I am not certain, but think it would be the same for shares - he would just state he is not the beneficial owner, and may have to state who the beneficial owner is.
Having said this, when I looked at it, it was actually better in the long term to have the shares just in one of the parent's names (lower earning one preferred). This is because kids get hit with really high tax rates once they get over ~$420 in interest/dividends per year.
Can only distribute $416 to trust beneficiaries below 18 years of age.
The cost of maintaining the trust may outweigh the benefits. I agree with Kangal above, put some aside in a term deposit/savings/separate account and then gift it to the child if they don't grow up to be a tosser and deserve it. If they grow up to be a tosser use funds to purchase Porsche.
Have a read of these ATO pages:
https://www.ato.gov.au/Individuals/Investing/In-detail/Child…
https://www.ato.gov.au/Individuals/Investing/In-detail/Child…
he wants the ability to not give it over if the child grows up to be a tosser
Wow, that's some forward thinking right there!
he wants the ability to not give it over if the child grows up to be a tosser
Slow clap. Superb ass-covering skill demonstrated.
I looked into this also. Tell him to put it in his own name. Otherwise you get screwed via taxes.
Thanks guys, will pass on the info. Thought it was an interesting topic to raise to get some info
Bitcoin
Buttcoin
ill put everything in that
Trust offers asset protection, should father go bankrupt may had to prove holding on trust for the kid
But trust cost 1k or so a year to run if using accountant
Why not a savings account?
They can simply funnel the figure when the child grows to 18, or 21, or never.
Doesn't even have to be the full amount, its up to the parent.