Help....Where to 'hide' the Trust??

[Mamaof3]

Ok hope i can explain this clearly.......we have a development we're doing and the loan application has been put through Bank West because they've been really easy to deal with (true lowdoc with only a self dec required and minimal exit fees around $600 i think). We have put the loan app in our personal names however, Accountant advised that a new Trust be set up because otherwise the income tax will be ridiculous for us when we sell up. Bank West seem to have a problem with Trusts as i understand and if there's going to be a Trust involved, they will find out about it somewhere along the line probably in the Transfer Documents or something....

Our Accountant was hinting to us that there are ways to keep this from the bank...by having another piece of document that the Bank doesn't necessarily have to sight which will allow us to still buy on behalf of the Trust (only Hubby and I are the beneficiaries of this Trust) or something?? he couldn't get into it because of his position as an Accountant but i spoke to the Conveyancer and she said there's no way of hiding it.....

Can anyone suggest anything we can do apart from going with another Lender???

 

[jrc]

Is the solution a trust where you and your husband are the trustees. Your other option might be a bare trust. If you and your husbnad are to be the sole beneficaries of the trust how is there a tax saving?

 

[JamesGG]

Can anyone suggest anything we can do apart from going with another Lender???

I'd probably suggest that trying to hide things from your lender isn't really a good idea.

 

[skater]

I'd probably suggest that trying to hide things from your lender isn't really a good idea.

I'd agree with this.

However, I have heard that Westpac don't mind lending to trusts AND they don't look at the trust at a later date when calculating serviceability. Not sure if this is stil the case, so I'd suggest talking to your broker.

 

[Mamaof3]

after a true low doc..most of them now require BAS's or 3mths trading statements...

hubby and me ATF 'x Family Trust' and from what he's told me, doing this allows the flexibility for him to then spread the income out to some in our personal names, some in our other company/trusts etc...

thinking easiest way to go is to now just find another lender who will offer same sorta product but will deal with trusts...cleaner me thinks although it may take a lot longer to get approved!

 

[Piston Broke]

Afaik I remember something about a trustee not having to declare that he is acting as one, or who's behalf he's acting on.
More research needed though, and it would depend on the wording of the contract that may quash it.

 

[Mamaof3]

Piston Broke i think thats more along the lines of what someone told us...you can buy on behalf of a Trust but noone actually knows that you are....just don't know who to find out more from

Conveyancers, Accountants etc don't seem to know nothing...

 

[Ausprop]

interesting... I was also told bankwest wont lend on land in a trust but it didnt occur to me to 'hide' the trust. The bank will usually want to see the original purchase contract...was it written on there?

in WA trusts dont appear on transfer docs

 

[Mamaof3]

you're right Ausprop Bankwest won't lend to company/trusts but was told that there's a way of actually doing it without the banks having to know about it...advice from conveyancer is that banks will eventually see it on some paperwork along the way but obviously some are aware of ways around this... which i'm obviously trying to find out...

 

[Aaron Sice]

funny - had something like this pop up the other day.

what's the problem with trusts? one or two director's guarantees is all that's needed, after all, they are liable in any event.

the trust just helps you divvy up the spoils in a more tax effective strategy. i don't see the issue.

gee i wish i was a bank. i'd turn the world on it's head.

 

[Bradsdad]

I'd agree with this.

However, I have heard that Westpac don't mind lending to trusts AND they don't look at the trust at a later date when calculating serviceability. Not sure if this is stil the case, so I'd suggest talking to your broker.

I'm not sure too many brokers would be diving into this one after hearing "hide" & truley lo-doc since the 1st of July .

Under a full doc loan and a trust involved there are quite a few lenders out there.

If it's 2 individuals (a couple even) buying as trsutess for the trust then only their names will appear on the COS and TOL and the trust doesn't appear on the title. The lending would also need to in the same name as the contract. I believe for the scenario in question however the lending is required in the trusts name. Unless you accountant is happy with this structure (loan in trustees names) I don't believe "hiding" is possible.

 

[Peter_Tersteeg]

BankWest residential won't look at trusts these days, but if it's a development site, then BankWest commercial should be able to manage it.

If you're looking for a residential loan, then trust, lo doc and construction is a nightmare to say the least.

As for hiding the trust part, the trustee company will appear on the title. It makes it kind of hard to hide.

If you have individuals as the trustee, with the same persons as the appointers and beneficiaries, in effect you don't really have a trust, you're just paying your accountant for a 60 page document.

 

[Piston Broke]

Piston Broke i think thats more along the lines of what someone told us...you can buy on behalf of a Trust but noone actually knows that you are....just don't know who to find out more from
Conveyancers, Accountants etc don't seem to know nothing...

It's a legal question for lawyers who specialize in property ownership issues.

If you buy in your own name, your personally liable.
If you buy in a company name, you will have to be personally liable.
If you buy in a trustee name, you will have to be personally liable.
End result is the same.

As for hiding the trust part, the trustee company will appear on the title. It makes it kind of hard to hide.

It's not hiding, the law allows the trustee to not have to disclose anything other than his own name.
Unless it has changed or different rules apply to real estate.
Meaning only the trustee name appears on the transactions without any reference to acting as a trustee for anyone.

Also a trust deed may have wording like:
"It shall not be necessary for any property of the trust fund to be in the name of the trustee, and at the discretion of the trustee be held in any other nominee's name"

So while the trustee name does appear on the title, it is not the actual owner of the asset.

If you have individuals as the trustee, with the same persons as the appointers and beneficiaries, in effect you don't really have a trust, you're just paying your accountant for a 60 page document.

 

[Ausprop]

I concur...in summary I think it woul dbe quite easy for an individual to 'hide the trust'

 

[martym]

maybe its a state by state issue...ie if personal trustees does the contract and transfer documents have just your names or does it have John Smith ATF the Smith family trust?

Trust, lo doc, construction / development. I think if you can get that through at resi rates take it! If you go commercial bank you wont get it through low doc I don;t think so other options is private funders at 13% and 1.5 - 3% estabilshment fee

 

[Rolf Latham]

the issue with trusts and companies is that it

DONT FIT the sausage factory

The cost to establish one of these to the lender is 2 x or more than the m&d style loans


ta
rolf

 

[Peter_Tersteeg]

It's not hiding, the law allows the trustee to not have to disclose anything other than his own name.
Unless it has changed or different rules apply to real estate.
Meaning only the trustee name appears on the transactions without any reference to acting as a trustee for anyone.

Also a trust deed may have wording like:
"It shall not be necessary for any property of the trust fund to be in the name of the trustee, and at the discretion of the trustee be held in any other nominee's name"

So while the trustee name does appear on the title, it is not the actual owner of the asset.

It doesn't really matter what the law says, as long as lenders comply with the law, beyond that they decide if you get the money or if you don't. If you don't disclose the details they want to know, they have no obligation to give you the money.

There have also been cases where it's been ruled, that if the trustee, appointer and primary beneficiary are all one and the same, then the trust has been set up for smoke and mirrors and effectively doesn't exist. A good lawyer can go through it as if it doesn't exist. Hence you should always use a corporate trustee.

 

[Piston Broke]

It doesn't really matter what the law says, as long as lenders comply with the law, beyond that they decide if you get the money or if you don't. If you don't disclose the details they want to know, they have no obligation to give you the money.

Actually it does matter, and the law says the only name on the transaction is the trustee and nothing else, as does the trust deed.
There is no obbligation to disclose, hence it not need disclosed.
As long they get their security, why would they care anyway, because they wont (nor should) lend any money if they don't.
Problems only arise when people try to pull shifty tactics.

There have also been cases where it's been ruled, that if the trustee, appointer and primary beneficiary are all one and the same, then the trust has been set up for smoke and mirrors and effectively doesn't exist. A good lawyer can go through it as if it doesn't exist. Hence you should always use a corporate trustee.

That would take a judge not a lawyer.
The lawyer would have to argue & prove that they are the only beneficiary.
Person or corporate trustee makes no difference to this issue.
Again it does'nt matter when the bank has real collateral and a gurantor.

 

[GeeJones]

.......If the loan application has the question on it (as many I have seen has)..... "does this loan relate to a trust?" Then to answer no here, and sign it is Fraud - straight up. I know of people getting prison sentences (suspended) for such answers recently.

 

[grossreal]

hi PT_Bear
maybe a funny question but you say that
but if it's a development site, then BankWest commercial should be able to manage it. are bankwest lending again into comm developments
from my understanding they stopped as of about 12 months ago
have you heard they are back lending
it was my understanding they lost most of their development arm
do you know they are back in this market
if so they maybe able to fund the deals that they closed off about 12 months ago
and I was not aware they were not funding trusts as I know a lot of deals that bankwest were funding when they did fund