Researching loan options – advice needed.

Get some proper advice first.

Why have 5 directors?? 5 times the risk. This will eat into your future serviceability too. I would look at having one director.

Is the HDT the normal/most common way to protect your assets. So if no lender is willing to lend to HDT's then how we protect our assets as well as being able to get finance, or is there some other common structure. Also if they do not lend to HDT right now, then should we structure it in a different way in the boom times to avoid the situation of not being able to refinance in the current conservative times.

I am not that familiar with the various forms of trusts.

Trustees can only distribute to the beneficiaries or class of beneficiaries. Usually a deed is worded such that the family of a named beneficiary, trustee or director/shareholder of the trustee is all included. So if you marry, have children, adopt children, get some step children etc they should all be automatically included without being named.

If you do go down the path of only having 1 director of the trustee then just make sure this is considered as it may be that the other people are not named beneficiaries and their family may not automatically be included. Once the trust is setup you cannot add or remove beneficiaries without huge tax and stamp duty consequences.

Having all people guarantee the loan will mean that in future when they apply for more loans – even for their own personal property – then they will be assessed as if they owed the whole debt of the trust. This can hurt!

A unit trust is great when different parties are involved. They allow the break up of profit in fixed shares, but offer no tax benefits or asset protection.  Look at having your units owned by a separate discretionary trust.

hi it

You would each have your own units, like shares in a company. eg 100 units with 5 people = 20 units each. You could each hold these units in your own names, or jointly with a spouse, or, preferably via a discretionary trust. What the others do with theirs is up to them, but it would be preferrable if each had their own DT incase of bankruptcy. You wouldn't want 3 of them to go bankrupt (eg they do another JV project between them) and their creditors get their units and control of the trust.

Anyway, if you do it like this and there is a profit of, say $100,000. each partner would get $20,000 profit and this profit, if in a DT could then be distributed to the lowest income earners of your family. I think each kids is allowed $2666 each year before paying tax. A non working spouse can earn about $11,000 pa with no tax etc. This can save you a bit.