The mess that is my equity

Having read a few posts here about the problems that can be incurred by accessing equity incorrectly I'm a bit worried and want to ensure my accountant is going to be happy.

Here's the background. I have a dual title mortgage. 60% of the title and mortage value is in my name and 40% is in my trusts name as it rents it to my business.

A while back I accessed $100K from my personal mortgage and used the funds to purchase an IP in my trust's name. So technically the trust now owes me $100K

I'm refinancing both original mortgages on Tuesday with NAB and will have another $130,000 put into my personal account.

As I understand it, I simply have to work out the amount of equity that belongs to the trust and pay it straight into the trust account BEFORE I touch any of the funds right? Then the trust can just pay me back at some point for 'lending' the $100K for the IP it purchased.

I can do whatever I want with the equity I accessed from my personal mortage right?
Can't you arrange the NAB to credit yours and the trust's accounts separately ?

A trustee should not co-mingle trust assets with their personal assets.

The original $100k sounds like a non-commercial (at call) loan to your trust, which can be returned to you at any time ... provided it does not become statute barred for some reason. I would make sure there is a minute somewhere in the trust documents acknowledging the debt to you.

You should also have a note yourself for your estate should the inevitable happen sooner than expected.


Thanks Rob. The loan is documented but gee I'm dumb. I guess there's no reason whatsoever the bank can't simply split the funds and place them in different accounts. What an idiot.

If there is intermingling of funds then it could be deemed that the trust is a sham - it is just the trustee treating the funds as his own. Any asset protection benefits might be lost.

I would consider getting the NAB to redo it and be on the safe side.