recently bought an off the plan property under SMSF which will be financed by mortgage. Need to set up a custodian trust with corporate trustee. How can I set one up myself, and sequence (via online agents, eg, clearDocs) and what do I have to take note of? any advice thanks in advance
step by step instructions to setup a custodian trust with corporate trustee
- Thread starter fatboyslim
- Start date
By law you are required to obtain financial advice on this type of structure. Speak with a financial advisor. The statement of advice they produce should contain the information you require.
Frankly, you'd be stupid to try and do this yourself... appoint an expereinced legal advisor. It will cost you a few grand but at least you have the comfort that its done right. Simple mistakes can result in costly problems.
PT is right, most lenders will want you to get sign-off that you've had both legal and accounting/financial advice.
Theoretically you can get around this via a related party loan but you really need to get yourself some advice.
PT is right, most lenders will want you to get sign-off that you've had both legal and accounting/financial advice.
Theoretically you can get around this via a related party loan but you really need to get yourself some advice.
Probably end up getting it wrong anyway and then when subject to audit have to engage someone to represent you at 550 per hour to try and clean up the mess. Love the fact so many people are doing things themselves. The number of clients I've picked up from audits has almost overwhelmed me. Gone are the days of doing basic tax work and clients complaining about fees. Audit work and resolution is a much better game to be in. Thank you forums and Internet.
Please don't do this. Super (particularly) SMSFs is a constantly changing, evolving area of law. Get proper legal advice, so if something does go wrong, at least you can tell the ATO that you relied upon professional advice and you may be able to sue their profesional indemnity insurer for any costs if they were negligent in their advice.
Like Terry said you need to seek proper advice quick.
Generally the steps should be;
1/ The SMSF trustee should see their advisor about them wanting to borrow in their SMSF.
2/ The trustees of the fund will need to prepare a new investment strategy to provide for borrowing to acquire a particular type of asset. You will also most likely need to have your SMSF updated to ensure it covers the most recent SMSF rules.
3/ The trustee should then seek a pre approval of a loan from a lender as there have been cases of trustee’s exchanging contracts only to find out that they were not able to get a loan as lending criteria are different for SMSF’s Limited Recourse Borrowing Arrangements. Having said this, off the plan purchases also add further complexity as lenders approvals are generally only good for approx. 90 days.
You should also confirm with the lender at this time whether they require a corporate trustee of the SMSF.
4/ Once the trustee has a pre-approval and found a suitable property they need to set up their Security Trustee to hold the property on behalf of the SMSF. You MUST ensure that the security trustee is set up BEFORE you enter into a contract to purchase the property as the Security Trustee will need to be the purchaser on the contract.
5/ Once you have set up the Security Trustee you can formally apply for the loan and also set up your Bare Trust documentation. In this regard each lender may have different Bare trust documentation wording requirements so its especially important to get this right from the outset.
6/ Contracts can now be exchanged with the purchaser of the property being the Security Trustee.
7/ It is now just a case of settling the loan and the purchase when the vendor is in a position to settle.
Generally the steps should be;
1/ The SMSF trustee should see their advisor about them wanting to borrow in their SMSF.
2/ The trustees of the fund will need to prepare a new investment strategy to provide for borrowing to acquire a particular type of asset. You will also most likely need to have your SMSF updated to ensure it covers the most recent SMSF rules.
3/ The trustee should then seek a pre approval of a loan from a lender as there have been cases of trustee’s exchanging contracts only to find out that they were not able to get a loan as lending criteria are different for SMSF’s Limited Recourse Borrowing Arrangements. Having said this, off the plan purchases also add further complexity as lenders approvals are generally only good for approx. 90 days.
You should also confirm with the lender at this time whether they require a corporate trustee of the SMSF.
4/ Once the trustee has a pre-approval and found a suitable property they need to set up their Security Trustee to hold the property on behalf of the SMSF. You MUST ensure that the security trustee is set up BEFORE you enter into a contract to purchase the property as the Security Trustee will need to be the purchaser on the contract.
5/ Once you have set up the Security Trustee you can formally apply for the loan and also set up your Bare Trust documentation. In this regard each lender may have different Bare trust documentation wording requirements so its especially important to get this right from the outset.
6/ Contracts can now be exchanged with the purchaser of the property being the Security Trustee.
7/ It is now just a case of settling the loan and the purchase when the vendor is in a position to settle.
