changing trustee

[bubbleroo]

Hi all,
Could someone please advise how hard/easy to change trustee for a discretionary family trust ? From a bank point of view & govt point of view i guess. From how i understand trust, eg. if my husband is the trustee now then bank will base all lending on his income & serviceability so when this is low, could we simple put me (the wife) on as trustee then continue to buy & prosper ? Is it that simple or i am missing something ?

many thanks

 

[DaleGG]

HI

It is very easy to change trustee of your trust and something that your solicitor or accountant can easily handle.

There is no extra stamp duty payable in doing so, but, the bank may be a little more troublesome even though they will still base their lending decisions on your own personal income as well as the trusts anyway.

Dale

Originally posted by bubbleroo
Hi all,
Could someone please advise how hard/easy to change trustee for a discretionary family trust ? From a bank point of view & govt point of view i guess. From how i understand trust, eg. if my husband is the trustee now then bank will base all lending on his income & serviceability so when this is low, could we simple put me (the wife) on as trustee then continue to buy & prosper ? Is it that simple or i am missing something ?

many thanks

 

[bubbleroo]

Hi Dale,
Does the bank needs to revalue the new trustee lending capacity for the particular trust ? My situation is that my partner lending capacity is to its limit now so i wonder if i could stand in as trustee then borrow to purchase more IP for the trust.

thanks

 

[geoffw]

Dale,

Changing the trustee of the trust may be easy enough- but what about the property loans? Mine are in the name of "GeoffW as trustee for the GeoffW Trust". So if I changed the trustee, would I have to change the name on the loans- and so trigger a sell event (with CGT, stamp duty etc)?

 

[DaleGG]

Hi

I am afraid that this is probably a question for one of the mortgage brokers on this forum, but, the bank should take into account all of the circumstances and look for a way of lending you the money.

Dale

Originally posted by bubbleroo
Hi Dale,
Does the bank needs to revalue the new trustee lending capacity for the particular trust ? My situation is that my partner lending capacity is to its limit now so i wonder if i could stand in as trustee then borrow to purchase more IP for the trust.

thanks

 

[DaleGG]

Hiya Geoff


No, the change of trustees does not trigger a CGT event whatsoever. Yes, the name on the bank loan changes, but, the facts will show that the trustee is merely acting as a trustee and the underlying assets have not changed hands at all.

Dale

Originally posted by geoffw
Dale,

Changing the trustee of the trust may be easy enough- but what about the property loans? Mine are in the name of "GeoffW as trustee for the GeoffW Trust". So if I changed the trustee, would I have to change the name on the loans- and so trigger a sell event (with CGT, stamp duty etc)?

 

[geoffw]

Thanks Dale.

Presumably tou could not use a trust then to sell a property just by changing the trustee to the buyer's name? (Or could you?) Or does the trustee have to be already a beneficiary in order for the transfer to take place?

 

[Nicholas H]

changing trustee whould be like changing the person in a job .. it still belongs to the trustee of the trust .. what the name of the peron changes not the position .. changing it to a beneficiary changes the owner .. which then would trigger all the govenment chargers

Originally posted by geoffw
Thanks Dale.

Presumably tou could not use a trust then to sell a property just by changing the trustee to the buyer's name? (Or could you?) Or does the trustee have to be already a beneficiary in order for the transfer to take place?

 

[Nicholas H]

My understanding is that the bank lenders based on who is guaranteeing the loan, if the trust generates an income and you are borrowing against that income stream then this is what it is uses .. if your husband is going guarantor then they look at his income, if you are going guarantor then your income .. who the trustee is I do not think matters .. just who guarantees that the trust will pay them.

Originally posted by bubbleroo
Hi all,
Could someone please advise how hard/easy to change trustee for a discretionary family trust ? From a bank point of view & govt point of view i guess. From how i understand trust, eg. if my husband is the trustee now then bank will base all lending on his income & serviceability so when this is low, could we simple put me (the wife) on as trustee then continue to buy & prosper ? Is it that simple or i am missing something ?

many thanks

 

[bubbleroo]

Hi
Do we have to tell the bank the change of trustee at all ? cos from Nicolas eg. we don't have to ask for permission to change an employee. What my intention is to be able to borrow some more to buy. Bank looks at trustee capacity when lending so being a natural person there is limit.

If i take on the role as trustee do i take on the loan repayments as well or will bank look at it as the trust's duty, hence separate to the current trustee. Therefore my lending capacity will be higher. Eg. Trust owe bank 400K when i become trustee do i take on that loan as well or is my debt 0 ?

bubbleroo

 

[Nicholas H]

I do not know i you have to tell the bank, someone else can answer that .. but as far as I know it is not the trustee who is important .. it is the person that guaranteeing the loan, if the trustee is a coporation or a person does not matter .. if you change trustee .. but the old trustee is the guarantor then they are still going to be guarantor, especially if the loan was based on there person income .. if the bank lent the money purely on the income of the trust with no guarantor (will they ever do this) then that would be a different matter

Originally posted by bubbleroo
Hi
Do we have to tell the bank the change of trustee at all ? cos from Nicolas eg. we don't have to ask for permission to change an employee. What my intention is to be able to borrow some more to buy. Bank looks at trustee capacity when lending so being a natural person there is limit.

If i take on the role as trustee do i take on the loan repayments as well or will bank look at it as the trust's duty, hence separate to the current trustee. Therefore my lending capacity will be higher. Eg. Trust owe bank 400K when i become trustee do i take on that loan as well or is my debt 0 ?

bubbleroo

 

[Terryw]

Have a read of some mortgage documents. I had a quick look at an ANZ one and it stated the Trustee is not to be changed without their permission. An ING one stated changing trustees would be breachinng the loan agreement.

So I guess you would have to apply for the loan again. You would take into account all income from the trust (rent etc) and the new guarrantors income as well.

Terryw