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Hi, I was referring to what may be known as the refinancing principle. This means that if a new debt is obtained in order to pay out an existing debt, then the new debt will be taken to have the same purpose as the previous one. Therefore if the (potential or actual) interest on the existing...

Hi, yes, this would be correct. Also if the trust owes you (personally) money then it could use other borrowed funds (such as the LOC) to repay that debt. Then the interest on the LOC may also be deductible.

Hi, yes, other structures can be used to solve the problem. This also works when using trust funds for a personally owned investment property, for example. However it appears Belleran has the property, the savings account and the LOC all in the trust name. Per previous posts, the principle of...

Hi, so would I. The principal of mutuality prevents this. You cannot owe money to yourself as it is a zero sum. However using other structures may allow for some creativity as Ozperp suggested.