Hi all, I have spoken to two accountants in the last three weeks in regards to asset protection. One was happy to structure a corp trustee and descretionary trust, and the other said it was unnecessary. Unnessary, due to likelihood of a law suite, ongoing cost, complication, trust guarantor will be me anyway, assets will be somewhat protected by mortgages etc etc. . . Your thoughts please??
My solicitor, my accountant and my financial planner all seem OK with the thought of a corporate trustee of a trust. The advantage that I see is that you are able to invest through the trust which can then be passed on to the beneficiaries of your will, when the time comes, by simply changing the Director(s) of the company, meanwhile you get all the advantages of the investment and the costs will be well off-set against the overall gains. You will get to pay company tax however which may be less than your personal tax anyway and you can distribute any profits as you see fit. You can also appoint share holders and distribute profits through that mechanism if desired.
99% of the trust deals we finance have a corporate trustee. Additional protection for minimal extra cost. In some instances it’s much more preferable to have a corporate trustee otherwise lenders will not lend to you or a limited number will, ie in SMSF setups.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Best to speak to a lawyer about asset protection. Accountants don’t know about the laws of ‘equity’
The reason to have a company as trustee is because a trustee is personally liable for the debts of the trust. a trust is not a separate entity but a relationship with the ownership of trust assets being in the name of the trustee. So if the trustee is sued the assets of the trust will be at risk and if these are not enough to satisfy a court judgement, for example, the trustee’s person assets will be at risk. A company is a separate legal person separate from its directors and shareholders and liability is usually limited to the company’s assets – which will be $2.
There are other benefits of a company trustee. Control can be passed without transferring title for instance.
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
when the time comes, by simply changing the Director(s) of the company, meanwhile you get all the advantages of
Trust assets cannot be passed on via a person’s will. Where the trust is a discretionary trust the appointor position can be passed on (sometimes in a will, but better outside) and the trustee company shares could be passed on, but not the property of the trust. Where the trust is a unit trust and you own the units then the units can be left via your will.
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
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