Glossary
Discretionary trust
Also called: family trust
A discretionary trust is a trust in which the trustee decides how income and capital are distributed among a group of beneficiaries. Many families and businesses hold property through such trusts.
An example
A family trust with a company as trustee buys an investment property. The lender deals with the trustee company, reviews the trust deed and usually requires guarantees from the directors.
Why it matters
Lenders need to confirm the trustee has power to borrow and give security under the trust deed. Missing or outdated deeds can delay a loan, so having the deed and any amendments ready helps.
Points to check
Lenders usually ask for the full trust deed, any variations and evidence of who the trustee and appointor are. Check that the deed allows the trustee to borrow and give security for the purpose you have in mind. Some states treat trusts differently for land tax and foreign purchaser surcharges, so get advice before buying through a trust. Keep the trust's records in order, because missing documents are a common cause of delay.