Terry,
Another important question,
What happen if the IP in the HDT appreciates 50k in value, will you need to create more units in the HDT if you want to use this equity? and how does the bank response to the refinance?How much paper work is involved in creating more units in the trusts for the above case.
Do bank lend upto 90 – 95% if you have a HDT? (including mortgage insurance).
Thanks
ptnPtn, You will have to check with an accountant about the units.
Many banks don’t like hybrids. The main problem is the title and loan are in different names with corporate trustees.
From memory, Bankwest have done 95% for one of my clients with a hybrid trust.
Do you need a company as trustee? You need to assess you risk tolerance. A company would protect you more if the trust has a problem and is sued. This can happen if investing in business or property, but not if investing in shares only.
Terryw
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Originally posted by Terryw:P. This can happen if investing in business or property, but not if investing in shares only.
Don’t be to sure Terry, this has happened before and will happen again.
Picture this, an accident has happened.
You invest in shares after the accident happened.
Lawsuit starts with the shotgun approach.
Court case is lost and shareholders (including you) need to pay damages and court costs.I know of a solicitor that this happened to and it bankrupted him.
CATA
Asset Protection Specialist
[email protected]Cata
Are you saying you own shares in a private company, the company is sued, and the shareholders are sued as a result.
It is my understanding that shareholders are not responisble for the actions of a company – unless they are defacto directors etc.
eg. you held shares in HIH, how could you be sued in relation to this company?
Terryw
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I thought so to Terry untill I heard this.
Can’t tell you anymore but it would have to have been extreme circumstances.CATA
Asset Protection Specialist
[email protected]Must have been some sort of fraud or criminal behaviour involved?
Terryw
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Hi Terry,
From memory, Bankwest have done 95% for one of my clients with a hybrid trust.Sorry if I am repeating myself but need to know exactly.
Your client, did he have a company trustee?Cata, I am not planing to do any commercial business in my trust and asset protection is not a point of interest now. Beside, just create a company trustee in a few years time when I feel the need.
Thanks
ptnHello All
Very interesting thread.
Terry, your explination of Hybrid DT’s and their use and structure is the easiest to understand that I have ever read. Thank you.
This leads me to my questions.
If the IP being held in the DT is CF+ from day 1, is there any other reason to create a hybrid DT rather than an ordinary DT?
Is it possible to convert a normal DT into a hybrid DT one day if the need arises or is this dependent on the trust document?
I just read the bit about “not poisoning your property” on Chris Battens site. Now my head hurts. [worried]
Elka
Originally posted by ptn:Hi Terry,
From memory, Bankwest have done 95% for one of my clients with a hybrid trust.Sorry if I am repeating myself but need to know exactly.
Your client, did he have a company trustee?Cata, I am not planing to do any commercial business in my trust and asset protection is not a point of interest now. Beside, just create a company trustee in a few years time when I feel the need.
Thanks
ptnHi Ptn
I am in Thailand atm, so cannot look thru my files. From memory he did not have a company as trustee, just himself. I will send Bankwest an email to see if anything has changed.
Terryw
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Elkam,
Is it possible to convert a normal DT into a hybrid DT one day if the need arises or is this dependent on the trust document?Your questions are very meaningful (as always), I am keen to see Terry answer this important question too.
Regards
ptnYes, missed this one. The trusts can be converted, but with the fees it is probably cheaper to start a new one.
Terryw
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If you set up a hybrid trust to start with, then issue no Special Income Units, the trust will act as a discretionary trust untill such time as units are issued.
Then it becomes a hybrid trust.
And the reverse also, if the hybrid trust buys back all units that were issued then it effectivly becomes a discretionary trust until more units are issued.CATA
Asset Protection Specialist
[email protected]Hi Cata,
Thank you for that informative description. I read something like this before but was a lot more complex than your explanation. Makes Sense now.
Cata / Terry, Can you please also answer my earlier ?
What happen if the IP in the HDT appreciates 50k in value, will you need to create more units in the HDT if you want to use this equity? and how does the bank response to the refinance?How much paper work is involved in creating more units in the trusts for the above case.
Many thanks
ptnThe bank shouldn’t have an issue. The security has increased in value, so the loan can increase. They don’t know about the units etc. That is an accounting entry.
Terryw
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Parramatta
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Thanks Terry,
I’ll look forward to seeing bankwest reply to your email.
Kind regards
ptnStill waiting for that reply from Bankwest!
Terryw
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Hello
Thank you Terry and Cata for the great lesson in Hybrid DT’s. You have made it very clear for me. [grad]
Elka
Terry,
Has bank west response to your email yet? [cigar][puke][glum2][sleepy2][upsidedown]
Thanks
Regards
PtnPtn,
No they haven’t! Will send again.
Someone else here mentioned a 6 month settlement with BW because they were slow. Now I can beleive it.
Terryw
Discover Home Loans
Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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