A number of additional fees may be involved when you create a trust account in AU. These can include setup fees, ongoing maintenance fees, and performance-based fees.
Setup fees
The trustee typically charges setup fees to cover the trust’s costs. These can vary depending on the complexity of the trust and the number of assets involved.
Maintenance fees
Ongoing maintenance fees are usually charged every year and are used to cover the costs associated with maintaining the trust. It can include things like accounting, tax preparation, and legal services.
Performance-based fees
The trustee typically charges performance-based fees if the trust achieves specific predetermined benchmarks. For example, you may be charged a performance-based fee if the trust generates a certain level of return on investment.
Transaction fees
Transaction fees may be charged whenever a transaction is made within the trust. These can vary depending on the type and value of the transaction.
Exit fees
Exit fees may be charged when assets are withdrawn from the trust. These can vary depending on the number of assets involved and the time the trust has been in place.
Termination fees
You may be charged termination fees if the trust is terminated prematurely. These can vary depending on the reason for termination and the number of assets involved.
How to invest with trusts
Evaluate your needs
The first step in investing with trusts is to evaluate your needs. It includes determining your investment goals, assessing your risk tolerance, and understanding the fees involved.
Choose a trustee
The next step is to choose a trustee. The person or institution will manage the trust on your behalf. There are many types of trustees, so choosing one that best suits your needs is essential.
Select your investments
Once you’ve chosen a trustee, you can select the investments you will hold in the trust. It can include stocks, bonds, mutual funds, and other securities.
Monitor your trust
After establishing the trust and making your initial investment, it’s essential to monitor the trust on an ongoing basis. It includes reviewing your investment performance and making sure the fees are reasonable.
Benefits of investing in a trust
Asset protection
One of the main benefits of investing in a trust is asset protection, meaning your assets are safe from creditors, lawsuits, and other legal claims.
Tax advantages
Another benefit of investing in a trust is the potential for tax advantages. You can structure trusts in a way that minimises your tax liability.
Professional management
When you invest in a trust, you also get professional asset management. It can provide peace of mind and help you achieve your financial goals.
Flexibility
Investing in a trust also provides you with flexibility. For example, you can specify how and when your assets will be distributed.
Estate planning
Another benefit of investing in a trust is that you can use it for estate planning purposes. It includes things like controlling how your assets are distributed after your death.
Risks of investing in a trust
Loss of control
One of the risks of investing in a trust is that you may lose some control over your assets because the trustee has discretion over how the trust is managed.
Undue influence
Another risk of investing in a trust is the potential for undue influence. It can happen if the trustee is given too much power or there are no checks and balances.
Fraudulent activity
Investing in a trust also carries the risk of fraudulent activity. It can happen if the trustee is not honest or if the trust is not managed correctly.
Poor investment performance
Another risk of investing in a trust is poor investment performance. It can happen if the trustee makes terrible investment decisions or if the trust is not adequately diversified.
High fees
Another risk of investing in a trust is high fees. It can eat into your returns and reduce the overall effectiveness of the trust.
