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beneficiaries account in a discretionary trust

Discussion in 'Accounting, Tax & Legal' started by annieb, 3rd Aug, 2014.

  1. annieb

    annieb New Member

    Joined:
    3rd Aug, 2014
    Posts:
    1
    Location:
    Brisbane
    Hi if anyone can assist it would be great.

    We have a discretionary trust and want to purchase a lease in a motel the cost is 700k.

    Banks will only lent 50% so we will have to come up with the cash, will also have to come up with 50k float to get the bank account going.

    So now the trust owes us 400k, it will be paying us a wage over the year so the distribution will not be much.

    My question is can we draw down on the 400k that the trust owes us? of course if bank account has surficent funds.
     
  2. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    Have you loaned the money to the trust or settled it as a gift? If a loan then the trustee could/should pay it back under the terms of your loan agreement with the trust.

    If it was a gift then you need to read the trust deed.
    Think about the tax issues too.
     
  3. SME Specialist

    SME Specialist New Member

    Joined:
    5th Aug, 2014
    Posts:
    3
    Location:
    Melbourne, VIC
    How was it set up

    It depends how it has been set up.

    Given the funds where not gifted to the trust, If there is a loan agreement refer to the loan terms, however if there no agreement (generally the case) then you are free to withdraw the fund.

    However for the trust to end up with surplus cash and the only item it holds is a property then you will most likely find that the surplus cash is a result of profit and would link back to distributions of profit.

    (may not always be the case where you have non cash tax deductions like depreciation)

    Generally you will find the cash loan is repaid when the property is sold.

    df@milestownsend.com
    Miles Townsend Chartered Accountants - Home
     
  4. SME Specialist

    SME Specialist New Member

    Joined:
    5th Aug, 2014
    Posts:
    3
    Location:
    Melbourne, VIC
    How was it set up

    It depends how it has been set up.

    Given the funds where not gifted to the trust, If there is a loan agreement refer to the loan terms, however if there no agreement (generally the case) then you are free to withdraw the fund.

    However for the trust to end up with surplus cash and the only item it holds is a property then you will most likely find that the surplus cash is a result of profit and would link back to distributions of profit.

    (may not always be the case where you have non cash tax deductions like depreciation)

    Generally you will find the cash loan is repaid when the property is sold.