I was just thinking about this today. How does a discretionary trust repay its loan back?
Say you have a DT with a corporate trustee. The Corp trustee gets a loan to purchase through the DT. The DT uses the loan to buy a property. This means the loan is with the Corp Trustee but the title is with the DT. Is my understanding so far correct?
Now if the DT wants to reduce its loan can it use some of it's incoming rent income to repay the loan?
Does this mean the Corp trustee needs to be a beneficiary? What happens if they are not a beneficiary?
Does the DT have to pay top marginal tax rate first then the left overs used to reduce the loan?
Is there another way for the DT to reduce the loan?
Or maybe I don't understand things correctly in which case I would greatly appreciate being set straight
Say you have a DT with a corporate trustee. The Corp trustee gets a loan to purchase through the DT. The DT uses the loan to buy a property. This means the loan is with the Corp Trustee but the title is with the DT. Is my understanding so far correct?
Now if the DT wants to reduce its loan can it use some of it's incoming rent income to repay the loan?
Does this mean the Corp trustee needs to be a beneficiary? What happens if they are not a beneficiary?
Does the DT have to pay top marginal tax rate first then the left overs used to reduce the loan?
Is there another way for the DT to reduce the loan?
Or maybe I don't understand things correctly in which case I would greatly appreciate being set straight