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When your home is in a trust 12 Feb 2015

It’s common to allow a family to live in the home owned by a family trust; on the basis the family pays all expenses.

If this agreement isn't documented, the payments made by the family could be treated as either rent paid for the use of the house, gifts to the trust or loans to the trust. Remove the uncertainty by making sure there is proper documentation. One way of doing this, is to get the trustees to record an appropriate minute in a meeting.

There is often a mortgage over the house. The capital repayments on the mortgage are the responsibility of the owner, the trust.  If you make those payments then, again, you're either making a donation to the trust or it owes you the money.  Solution – documentation. If you choose to make it an increase in the trust’s debt to you, then you need an ongoing record to show the accumulated liability of the trust. 

In a nutshell, you need some accounting done. While this might not need to occur every year, it should be done regularly.

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