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Trusts

Discussion in 'Accounting, Tax & Legal' started by Triu, 21st Aug, 2007.

  1. Triu

    Triu Well-Known Member

    Joined:
    1st Sep, 2006
    Posts:
    161
    Location:
    WA
    What does it mean .......... Trustee has no rights to Capital in the Trust. Does that mean you have to sell the Asset within the Trust if you want to access the equity?

    Please some explain i am not to sure about how this works with a HDT.
     
  2. Rob G.

    Rob G. Well-Known Member

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    6th Jun, 2007
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    717
    Location:
    Melbourne, VIC
    Sounds like your deed disallows the trustee to be a capital beneficiary. Not uncommon, especially if you are trying to protect your assets and yet still control them.

    The trustee is still the legal owner and can usually (check the deed) borrow against equity in trust assets for use in trust investments.

    Rob
     
  3. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Had a closer look at a Trustees power to mortgage a trust asset.

    This is NOT a nice area !!

    You had better find an explicit statement in the deed or else you will need to rely on the implied power of management where it involves power of sale or to raise funds for use in the business of the trust. BUT this could be thin ice.

    The Trustee Act 1958 (Vic) or other equivalent state Trustee laws do not go so far as to import an explicit power as far as I can see.

    Ironically, in equity if the Trustee makes an unsecured borrowing they are entitled to be indemnified from trust property - even if unauthorised provided it was done in good faith.

    This does not extend to secured borrowing !

    Sooooo ..... GET SOMEONE TO CHECK YOUR TRUST DEED BEFORE YOU ACT.

    Cheers,

    Rob