Hi All,
From July 1, I will become a partner in the accounting firm in which I currently work. The structure of the partnership will be a partnership of family trusts. My family trust will have a corporate trustee.
My personal income source will go from salary (as an employee) to a distribution from my family trust.
My wife and I are keen to continue investing (and borrowing money), so my question is, what will banks want from us when we are looking for new finance. I assume they will need two years tax returns (for standard loans) and we are prepared to wait.
But are there any unforseen issues or problems with my primary source of income being from a discretionary trust? I will be sole director and shareholder of the company trustee.
Also, to pre-empt any questions, banks won't lend solely on my wife's income, and she is self employed as well.
Cheers,
Dan
Hi Dan,
You shouldn’t have any major problems as long as you have a good banker. I’ve financed plenty of accounting firms in VIC; sometimes without real estate. I’ve never not been able to provide finance to partners after they buy in to a firm.
Stay with a major and avoid mortgage insurance if possible.
Banker
As Banker has mentioned can't see too much of an issue at all.
As the business is already established you wont have to wait for 2 Years Tax returns.
Richard Taylor | Australia's leading private lender
Technically there could be a problem though. As the trust is a discretionary trust, there is no guarantee the trustee will distribute anything at all to you. Although in practice I think banks consider the past performance and ignore this technicallity.
Anyway congratulations on becoming partner Dan.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry,
That was my concern as well, that the majority of my income would be coming from a discretionary source. But as director of the trustee compamny and appointor of the trust, I should be able to get some money into my own name!
I think either you should directly go to the bank or take some legal advice.
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