Hi Thunder
Who advised on the PPOR set up? This will provide very little asset protection because you are basically acting as trustee for your husband. Having him on the mortgage destroys any little protection there was. I guess you may not have been working at the time and couldn’t qualify for the loan. If this is the case then not much you could have done, but if you were working then best to leave him out of it completely. If you qualify I would change the loan to your name only. This may also assist with borrowing capacity a bit, depending on many things.
Your accountant is providing legal advice! What would happen if you died? Who is the director, husband probably? Imagine if you died and there was a problem with the will. Appointed husband executor, but he cannot handle the job and someone else is appointed, family, or public trustee company. They will control the shares of your trustee company. They could sack the director and appoint themselves as director. They could then distribute trust assets to benefit themselves. If they are not beneficiaries they could simply amend the deed (depending on wording) and vest all the trust assets to themselves. Your husband may be a surviving appointor, and could sack the trustee. But this can all be done before he gets wind of it. It is also a major hassle changing trustees.
If you were the sole shareholder and director and die then the trust would be unmanned until probate is granted. Bills could not be paid etc. The corporations act allows your legal personal representative to take control until a new director can be appointed, but you won’t have a LPR until probate or letters of administration is granted by the Supreme Court. This could be 6 months to a year or more away.
With the LOC the names on this will be the names on title to the PPOR. Again to reduce risk and to preserve borrowing capacity it would be good if you could leave the husband off. Let him start afresh with guaranteeing the trust loans. And structure the trust so that only one guarantee is needed. No sense in both guaranteeing something as it doubles the risk and halves the borrowing capacity of future property.
I like LOCs for tax reasons. It is easy to pay for expenses and write a cheque. But one the money has been used then best to change them to term loans. Eg. You spend $100k on a deposit for the next IP from your LOC. After settlement just change this $100,000 to an IO loan. You may get a lower interest rate and it may not be payable on demand.
You will also need to carefully consider how the trust will access your LOC. Possibly a written loan agreement is needed and consideration of the interest charged is also needed.
Also if buying in VIC you may want to consider buying in one of your personal names. You can then take advantage of the stamp duty exemption and do the ‘spousal sale strategy’. Wait for growth and then sell to the other spouse. No stamp duty payable, increase deductions to the purchaser and the cash released to go off the non deductible home loan.