Hello,
I've just started my first trust with myself as trustee. I already understand the asset protection & tax implications of company vs. individual as trustee, but the borrowing power issue is stumping me.
I understand that you don't have to declare debt as your own if you have a company acting as trustee, but what if you as an individual are the trustee? I don't mind being guarantor for a trust, but I don't want to have to declare the debt as entirely my own. I had a mortgage broker from 'Assured' tell me that the debt would still be my liability (even if the trust wasn't in default) so I'm puzzled; if I'm taking on the debt, I should own the asset too!Thanks
Megan
As a trustee you have a right to be indemnified for debts you incur acting in that capacity from the trust property. The issue you have is that you are the trustee so any borrowings by the trust are borrowings by you with a right of indemnification from the trust property, but the assets of the trust don't belong to you but are held by you in trust as per the trust deed.
Yes you will need to declare the debt of the trust when you go for future loans. The same with loans you have guaranteed for a company as well.
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
Sorry Megan
This is clearly not true. You certainly have to declare it.
I understand that you don't have to declare debt as your own if you have a company acting as trustee
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
