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Margin Loans Family Trust/Company Trustee - Margin Loan

Discussion in 'Finance & Banking' started by WealthCreator, 6th Oct, 2007.

  1. WealthCreator

    WealthCreator New Member

    11th Mar, 2007
    Sydney, NSW
    Hi all, Im after some advice on obtaining a Margin Loan. Any help would be much appreciated

    I have just set-up a Family Trust Fund with a Company Trustee and am wanting to obtain a margin loan to kick off my investment. The inital investment injection is minimal for we just wanted to have the structure in place.

    Which one would we apply for the Margin Loan in? The Trustee Company, the Trust Fund, or the individual trustee?

    Also, if either of these had made a minimal amount and we wanted to prepay the interest in advance on the Margin Loan, how would this work? Would i mearly capilitise the interest, pay monthly until money is made and pay the interest from the income?

    Hope this makes some sort of sense

    Any advice or stratigies would be greatly appreciated.

    Thanks. Tim :confused:
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    9th Jun, 2005
    Sydney, Australia
    Many (but not all) margin lenders have a minimum borrowing of $20K.

    Don't forget that your trust doesn't actually exist as a separate entity, so it can't own or borrow anything ... everything gets done via your corporate trustee "in trust" for your trust.

    So if your trustee company was called "Your Trustee Company Pty Ltd" and your trust was called "Your Trust", then your bank accounts will be in the name of:

    "Your Trustee Company Pty Ltd as trustee for Your Trust"

    ... and margin loans and investments like that are usually set up as:

    "Your Trustee Company Pty Ltd <Your Trust Account>"

    Just follow the instructions on the application form and call the margin lender for help if you aren't sure what you need to put in.

    Either way - you should get some advice from your accountant/advisor on the best way to do this stuff when you are just starting ... you don't want to accidently get it wrong !!
  3. Nigel Ward

    Nigel Ward Team InvestEd

    10th Jun, 2005
    Sim's right. The account should be set up with "XYZ Pty Ltd as trustee for the Wealthcreator Family Trust". What you'll find though is that some of the margin lenders will describe this as XYZ Pty Ltd <Wealthcreator Family A/C>.

    Also, be clear about who's who. The company is the trustee, it is the legal entity which should be entering into agreements, albeit in its capacity as trustee of the relevant trust. Assuming your set up is a typical one, you personally as beneficiary don't do anything. Just sit there and get your distributions, if any.