Transfering Equity to a Trust

Viewing 8 posts - 1 through 8 (of 8 total)

salocker
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@salocker
Join Date: 2005
Post Count: 14
June 9, 2006 - 11:17 am
My wife & I have joint title to an investment property.
What we would like to do is acquire another property under a trust structure and use the equity from the joint title property as collateral against the trust acquisition.
Can anyone confirm if this is possible? If so, which lenders would entertain this concept?
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
June 9, 2006 - 12:41 pm
Yes, should be possible. Most lenders would allow this.
But, why cross collateralise? Why not increase the loan on the investment property and lend that money to the trust to use as deposit.
Terryw
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Terryw
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@terryw
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June 9, 2006 - 12:42 pm
Oh I see now, asset protection issues. It may be safer not to have a loan outstanding as a loan would be a personal asset, and if sued this could be at risk. ie your creditors could call in the loans an get their hands on the money!
Terryw
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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cata
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@cata
Join Date: 2005
Post Count: 559
June 9, 2006 - 9:15 pm
Hi Salocker
It sounds straight forward to me, depending on your investment stratagie and your choice of trust. Most lenders are getting better with trusts but you will need a broker who knows how to fill in the paperwork (to moke it easier for the bank if they have a problem)
There are some knowledgable brokers on this site and you could do alot worse than Terry (I do not know him but this is the feel I get from his posts)
CATA
Asset Protection Specialist
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salocker
Member
@salocker
Join Date: 2005
Post Count: 14
June 10, 2006 - 11:06 am
Thx Terry & Cata,
Terry – That was what I was thinking re. the loan between the two entities.
cata
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@cata
Join Date: 2005
Post Count: 559
June 10, 2006 - 9:47 pm
If you loan money to a trust and are sued personally, the loan is seen as an asset to you personally. in this case the loan could e recalled as payment to a litigant.
Hope this helps
CATA
Asset Protection Specialist
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Paul Dobson
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@pauldobson
Join Date: 2003
Post Count: 1,196
June 11, 2006 - 10:30 am
Hi All
If a loan to the trust is seen as a personal asset, why not just gift the money to the trust?
Cheers, Paul
Paul & Karen Dobson
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cata
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@cata
Join Date: 2005
Post Count: 559
June 11, 2006 - 9:46 pm
Hi Paul,
This is a question that I get asked alot. If the money is not borrowed then yes it is easy to do. But if the money is borrowed then gifted to the trust, it will not be tax deductable as the purpose of the money is for a gift, not income producing assets.
It’s still easy but you will need to know all the facts. No tax deduction could turn some people off.
CATA
Asset Protection Specialist
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