So Steve McKnight’s book says to use trust funds to maximise on borrowing capability. So thinking I sound smart I start asking brokers and accountants about using this strategy to start investing. I’m keen to start and this is doing my head in. Everyone seems to say don’t bother, doesn’t work like that… But these people didn’t buy 130 property’s in 3.5yrs… Am I talking to the wrong professionals??? SO NOW WHAT TO DO??
Cash is king, and I really want to hit the ground running in the right direction and make a career out of this.
Can someone shed some light on this.Hiya
The whole using a trust to improve borrowing capacity methodology is outdated and doesn’t apply today.
Trusts have their place – but I wouldn’t encourage anyone to jump into using one just because they’ve read about them in a book.
Speak with a decent account/solicitor about YOUR individual circumstances to work out what’s best for you.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie, good words of wisdom.
Your right and I need to put more trust into my accountant.
I like to learn from others who have achieved financial freedom from property. Unfortunately I don’t know anyone who has achieved full financial freedom, only part of.Thanks again
Stefan
I too have been toying with the trust idea. I came out of reading Steve’s books with a different mentality in regard to the family trust idea however. I was under the impression that the trust would provide a little more security in terms of lawsuits.
I don’t plan on being used at any stage but you never know what might happen. If property is owned by a trust does that still mean that only the assets owned by that trust are susceptible paying for any damages that we may have been sued for? Thus protecting other investments/family home?I’m glad you understand Shiny Suitman.. You come out of reading Steve’s book with a different frame of mind. But I guess we got to roll with the times.
In most discretionary trusts no one beneficiary has any interest in the assets of the trust. So if a beneficiary were to be sued and end up bankrupt the assets of the trust are not property than can fall into the hands of creditors. An appointor of a trust may also be bankrupt yet the position of appointor is also not property that can be seized. If a trustee of a trust goes bankrupt then property they own as trustee is not property that is able to be seized.
The above is the general rule, but if you have transferred property into a trust it could be attaccked. If you have loaned money to a trust then that is still your money and will be available for creditors.
This is why the discretionary trust is the best invention since sliced bread! Anyone building up substantial assets needs to seriously consider using a discretionary trust as part of their family estate planning. But there are many issues with owning real property in a trust with the main one being land tax.
You need to speak to a lawyer about setting up trusts as it involves legal advice. You should also seek tax advice as there are many complex tax aspects to trusts 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
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