Living in an investment property owned by my trust

Discussion in 'Legal Issues' started by nuzullandchicky, 4th Jul, 2021.

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  1. nuzullandchicky

    nuzullandchicky Well-Known Member

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    I wander if anyone can tell me if I owned an investment property that is currently in a discretionary trust, can I live in it? The trust has a corporate trustee that I am the director and the sole beneficiary of. Based in QLD.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You own it?
    Sounds like it is owned by the company. If it is a discretionary trust that the company is acting for it is unlikely that you are the sole beneficiary either.

    Does the trustee have the power to allow a beneficiary to live in the property? Does the power extend to allowing no rent to be charged?

    If so you could live in it, if the trustee lets you.If not the trustee would be breaching its duties.

    But lots of tax and legal issues to consider.
     
  3. nuzullandchicky

    nuzullandchicky Well-Known Member

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    Ok well yes it’s my trust. My company which I’m the sole director of is the trustee and I am the sole beneficiary. Just wandered if there was a stick fast rule or if it’s more complicated than that?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Its not really 'your' trust. It might be a trust which you set up and you control - but that is only temporary. You can't be the sole beneficiary - you could but it would be extremely unusual.

    Does the trustee have the power to allow a beneficiary to rent a property? It will be in the deed.
    If so can it be at a rate less than market value? If this is not allowed in the deed the trustee would be breaching their duties as trustee and could be sued by another beneficiary - such as a disgruntled spouse of another beneficiary.

    There might also be tax consequences to this as well, especially if the rent is under market value - not to mention other legal issues.

    The trustee should seek legal advice.
     
  5. Scorpion

    Scorpion Member

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    Hi Terry - just a question for my own curiosity if you wouldn't mind indulging me - it is a hypothetical, but based on this situation.

    Say party A had a similar circumstance to OP (property owned by disc. trust, w/corp trustee, etc.) and party A lived in the property with party B. Party A and party B are married but party B is not a beneficiary of the trust. Would it be possible in the case of divorce for party B to seek the property they lived in with party A as part of divorce proceedings even if the property was not owned by party A? Would a bloodline trust change the outcome?

    I understand there might be a million different variations/considerations to the above, but am just looking for a high level general view of what the potential outcomes may be. Thankfully, I am not in this circumstance - I am just curious!

    Scorpio
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Sure would

    no
     
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  7. Scorpion

    Scorpion Member

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    Interesting - thanks for the prompt/concise reply
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    if the trust was controlled by someone else then the assets of the trust would be safer but it still might be a financial resource of a party to the marriage.
     
  9. Scorpion

    Scorpion Member

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    Yep, I gathered that might be the case. Very interesting area of the law!
     
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