Trust distributions

Hi guys.

Is there any specific lenders out there who accept one year of trust distribution income even though many ask for 2 years when assessing a loan. This person has gone from payg to receiving distributions from trust from the company her husband owns and she is a beneficiary.

Many thanks for your help.

Awesome website.

 

Most lenders refuse to tuse beneficiary income from a if they aren't also a trustee.

Is the husband also going on the loan

 

No but can if need be as joint borrower as he will be living in this property also.

 

Trustee is a company which husband is sole director of and has complete control.

 

Should be fine if he is involved too.

A couple of the big four only need one years financials now, and if the husband is on the loan they will be looking at the total of the trust income, not just her part of the distribution.

 

Thanks tobe. Appreciate it.

 

So am I correct in saying the following:

1) A trust where there is a corporate trustee with the husband as sole director as well as beneficiary of the trust will have ALL the distributions included in the husband's affordability calcs for mortgage purposes and not just his portion actually declared for tax?
2) If this is a family discretionary trust, does the wife need to be a named beneficiary or is it better to just have her included in "the family"?
3) This seems a good way to structure things as the wife (assuming she is on a lower marginal tax rate) can be allocated distributions, taxed at the lower rate and yet the husband can maintain affordability with the banks
4) The above will require 2 years operating history. If this is a brand new trust and distribution is done by 30 June 17, this will class as 1 year, then another distribution by 30 June 2018 will be classed as another year.

 

1. Depends
2. Doesn't need to be named but many legal issues to consider.
3. Doesn't work like that. If wife receiving income her serviceability will be boosted and no husband
4. Lenders may average 2 years tax figures.

 

I would think the source and nature of the trust income could also be a factor. Business trading income (contract or retail etc ) v's investment income from say property rental ? Stable or uncertain ?

 

Exactly.
Also, business may have been run as a sole trader in the past, now restructed into a trust. If this was the case (most likely not) I would be outlining this in comments section on my submission to the lender.