hi everyone
i was just a little confused about the way trusts work. we were thinking about a family trust. I just don’t know how it works
I red the forums on these topics an they moved past these points
how does a trust get finance?
if we already own 3 properties how do we transfer them a across into the trust ?
do we have to sell them to the trust?
what happens with going as guarantor on a loan for your trust?
how does that effect my personal borrowing power?
Thanks heaps for your help
Trusts can be a difficult concept to get y our head around.
A trust is an ‘arrangement’ where someone owns something on behalf of others. A discretionary trust is where the trustee owns an asset for a large class of members called beneficiaries. These beneficiaries usually include various family members.
When the trust makes a profit the trustee then can distribute the income to any of these beneficiaries. This can be done at the trustee’s discretion. Usually the trustee distributes to the lowest income earners to reduce tax.
A trust gets finance with the Trustee applying for the loan. The loan will need to be guaranteed by the trustee or hte directors of the trustee company and sometimes named beneficiaries.
If you guarantee a loan, then it is the same as having the debt. If the trust doesn’t pay the lender can come after you. So this affects borrowing capacity the same way as if you had the loan yourself.
To transfer ownership of your properties from yourself to yourself as trustee means stamp duty and possibly CGT as the beneficial ownership is changing from yourself to all the beneficiaries of your trust. Don’t think there is anyway around this.
Terryw
Discover Home Loans
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thanks for your help
In steve’s book he talks about his trust and how he goes Guarantor for his trusts, where he can use his income earning ability to secure multiple loans, allowing him to control far more property than if he was borrowing in his own name.
If you are Guarantor on a loan at one bank does it go on your credit file or can you become a Guarantor at the next bank down the road
Yes going guarantor will show on your credit file.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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