The purpose of forming a Trust for asset protection is for transferring your assets into it so that they are no longer in your personal name. We often use the saying: “You are trying to make yourself Worth Less, but still have control of the assets you use”. You do this by creating a Trust and transferring your assets into that Trust so that the Trustees becomes the legal owners of those assets and you no longer have a legal interest in them. However as Trustees of the Trust, and probably also Appointors, you retain some form of ultimate control over those assets because you manage them and have the ability to hire the Trustees of the Trust.

Where you are transferring a family home into a Family Trust you are carrying out a Conveyance of the property to the Trust. This could be for an existing property or a brand new purchase. We always recommend that you consider whether you purchase a new home straight into a Family Trust on settlement for three reasons:

(1) You are starting your Gifting Programme immediately, (possibly) at a rate of $27,000 gifting per couple per year (the $27,000 rate also applies to single people as well);

(2) You are locking in the total amount of gifting that would need to be done on the property at the value it is purchased at, not some future value; and

(3) Any capital growth you achieve in the property from the date it is purchased is a capital gain to the assets of the Trust which never has to be gifted by you.

This also raises the question as to what value assets and property need to be transferred into a Trust at. The simple answer to this is “Market Value”, and the reason for this is to prevent people transferring assets into Trust at an under-value so as to have a shorter Gifting Programme. Technically, whenever you transfer an asset to Trust you should have some form of Valuation (or an arms-length sale and purchase agreement) to justify the price for transfer.