I have received an email from the company that has set up my discretionary trust with corporate trustee, that Carey's Care in the Federal Court, has affected my asset protection strategy and it may not be as safe as a castle anymore and that they have a solution. Followed up with a phone call and email, I have these questions/concerns, for which I am waiting for a reply:
1) The company acknowledged that they were aware for months about the reduced asset protection through trust structures (due to the recent Federal Court case (Carey's case)) but decided not to advise their clients until you had a solution.
This denied these clients to make alternate arrangements in the meantime (should they have chosen so).
2) They confirmed that it is in particular my arrangement of discretionary trust with corporate trustee (all controlled by the same person) that is at particular risk.
3) Their email requested immediate action, requesting that friends or non-immediate friends take over as trustee/trustee director and/or principal appointor.
No explanation was provided about the liabilities/responsibilities that those people would face.
Nor was a warning provided that those people could distribute the assets without one's consent. Yes, there may be corporate laws addressing this possibility, but they do not prevent it happening.
4) They have requested that company and trust deeds are sent to them, without any specific instructions included.
5) They have requested payments without specifying what for.
6) They have not provided any template to fill in, should one have people willing to take on the roles they suggest.
7) No explanation was given for the event, where a suitable person (as suggested) could not be found.
eg. How much more asset protection would the existing (non modified) structure provide vs having the investments in your own name.
Further it was stated that there are even more issues with unit and/or hybrid trusts.
No specifics related to this was made in the email.I was wondering if others had their structures reviewed and what advice they were given.
Regards
WTBNow
Discretionary Trusts which you control have always been an unsafe asset protection strategy as the richstar/carey case have rehighlighted. The problem in his situation is that he was the trustee and the appointor of the trust which meant he had control and the court deemed the trust to be his alter ego and they were able to access his trust to liquidate the assets to satisfy the creditors. Realistically he was an idiot as this has never been a safe asset protection strategy and anyone who has assumed this is so is at risk of a severe negligence suit. The appointor of a trust always needs to be someone who is not at risk of being sued or going bankrupt as they are the controllor of the trust. As to having a corporate beneficiary and trustee of the trust, you run the risk of s109XA and XB issues of deemed dividend if the company distributions its profits to the compnay for tax purposes but doesnt actually cash flow it and you then take money from the trust as a loan. This structure may save you from paying more then 30% tax initially but can cause severe issues further down the track.
Goodluck with it
Thanks.
Will have a word with Ed Burton about this, as he organisation set my structure up.
WtBnowWhat was the carey case?
Have a look at recent Law Central Newsletters, back about 6 months ago, http://www.lawcentral.com.au. I don't think things are as bad as these people are making out.
Maybe they are just trying to scare their 'clients' into making unnecessary changes to earn more fees. Are these people who set up the trust solicitors or accountants?
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
Further it was stated that there are even more issues with unit and/or hybrid trusts. 
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