Hi all,
I'm an aspiring investor that has been hanging round these forums looking and learning educating myself about the in's and out's of basic property investment. Having just finished "Tax Structures 101" by Matthew Gillgan I have a query how to "Set up a Family Trust to protect family home".
Q. What generally happens when you gift a house to a trust? e.g. I own a house valued $400k mortgaged with a loan of $200k. When gifting the house to the trust I:
At this point I still have a $200k loan. Is that loan still secured by the house which I no longer own?
Is it correct that:
I'm an aspiring investor that has been hanging round these forums looking and learning educating myself about the in's and out's of basic property investment. Having just finished "Tax Structures 101" by Matthew Gillgan I have a query how to "Set up a Family Trust to protect family home".
Q. What generally happens when you gift a house to a trust? e.g. I own a house valued $400k mortgaged with a loan of $200k. When gifting the house to the trust I:
- Gift the house to the trust: the trust has house worth $400k and owes me (the settlor) a $400k debt
- I forgive the trusts debt to me: trust owes me $0, I still have a $200k loan to the bank
At this point I still have a $200k loan. Is that loan still secured by the house which I no longer own?
Is it correct that:
- if creditors had cause to come after me personally they house is protected as it is owned by the trust,
- however if I default on the $200k loan the bank sell the house in the trust as it is security for the loan?
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