Hi,
Has anyone had the experience setting up a family trust. Has it helped you to increase your borrowing capacity, protect your asset, minimise your tax. Please let me know the type of lender can help/understands that type of set up.
Regards
LeftyMost lenders understand a Family Trust structure however the costs for establishment and the potential rate discounts may vary from lender to lender.
Personal Trustees will give you more scope for negotiation as with a Corporate Trustee some lenders will not offer the Professional packages etc.
Certainly will NOT help you increase your borrowing capacity as the Trustee provide a Guarantee for the loan and this needs to be disclosed on any new application. Misconception from the good old days of financing.
Yes a DFT has benefits when it comes to Tax minimisation and asset protection. Of course the property needs to be positively geared to be able to minimise your Tax payable.
Richard Taylor | Australia's leading private lender
There are also a few tricks re lenders that don’t lend to trusts.
For example: Westpac, as per broker policy, cannot lend on a home / investment loan to a company as trustee for a trust. This is because their doc prep team in Adelaide print all the docs for brokers. If you go direct to a branch however they can print the docs locally – allowing them lend to a Company and Trustee when dealing with clients directly.
Brokers can still get around this however it’s more a matter of who you know – a lot of brokers simply can’t offer this structure via Westpac. CBA for example will not let a company take a Viridian line of credit. However if submitted with the borrower as the trust and the company as a guarantor – credit allow it…. When the docs are printed they reflect the real structure e.g. company borrowing as trustee for the trust.
As Banker mentions policy varies from lender to lender.
There are lenders out there that charge to have their in-house legal depts assess the suitability of the Trust Deed and the Company Constitution and there are lender that dont.
In saying that there are lenders that charge application / valuation / on going fees and there are lenders that dont.
Horses for course.
In the main we have never had a problem.
Even Company lodoc is doable these days at normal rates.
Richard Taylor | Australia's leading private lender
Discretionary trusts can help with asset protection and tax minimisation. I agree that they won't help borrowing capacity directly, but they can help indirectly by adding or changing guarantors – something which may not be possible if you borrow in personal names.
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
Hi Richard,
Thanks for your comments. I hear from one of Steven McKnight's seminars in Sydney last month he did state that it could increase your borrowing capacity. I understand your reasoning that you gave me. How could I have understood wrong from that seminar or is there away that it can be structured differently. I.E. Could Bob Jones family trust goes to ABC bank & use 1/3 of his borrowing capacity, then Bob Jones family trust (2) go to DFG bank etc.
Regards
LeftyLefty, do a search – this question comes up almost weekly these days
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
As Terry mentions it is the oldest chesnut doing the rounds and is incorrect.
Rather than go thru the reasons why just do a search and read what has been written on the subject before.
Richard Taylor | Australia's leading private lender
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