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  1. #1

    Default Properties in a trust and personal properties

    Hi there,

    I am new to this forum but I am looking for answers to my questions as below. My husband owns a property with his family of 4 in a trust and we have a personal property together outside trust.

    - The Trust is buying an investment property and the bank has suggested to make an amendment to the trust by removing his parents from the Trustees and retain them as beneficiaries only, making my husband and his brother trustees.

    - My husband and I have bought a turn key investment property for which we have paid 10% deposit already, the construction of the property will be completed in 5 months.

    Do you think my husband's financial position of being trustee with his brother will jeopardize our turn key property purchase? Since the liability for trustees will be 50% as compared to 1/3rd share he had.

    It's a bit tricky situation and not sure if I have explained it properly.

  2. #2
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,604

    Default

    What is the value of the Trust assets? What is the Trust debt?

    I don't expect you to post the answers, but if the equity is good, then no issue. If bad equity, then could be an issue.

    But rather than the Trustees, who guaranteed the loans with the bank? So if your Husband for example, is the sole guarantor then he will be liable for 100% of bank debt! So if his parents are the guarantor's then likely to cause no issue for your husband.

    My understanding of a worst case scenario, would be
    1) bank sells property, so this should repay the majority of the Trust loan, if not all the loan
    2) bank chases guarantors for rest
    3) If bank can't get all its money, then it might look at personally chasing all the trustees.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  3. #3
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,604

    Default

    Other options

    a) husband resigns as trustee, especially if there is high risk
    b) you set up your own trust to own your assets, therefore if your Husband is sued or is liable for something, your wealth is separated from him.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.


 

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