Struggling to understand asset protection provided by a trust

Hi Charlie,

Perhaps your lawyer has a view I haven’t heard before, but my understanding of trusts, companies and corporate law is that trusts separate ownership and control. Can your accountant contact your lawyer to confirm their opinion and perhaps provide you with a summary?

All the best,

– Steve

• This reply was modified 1 year, 11 months ago by  Steve McKnight.

Let me guess… that advice came from Dominique Grubisa…. the lawyer NOT entitled to engage in legal practice  but who continues to do webinars selling asset protection nonsense that has been exposed in scores of media stories?

charliefaddoul wrote:

I am receiving conflicting views from my lawyers and accountants and it is making it very difficult for me to understand things.

It doesn’t matter what an accountant says as this would require legal advice.

charliefaddoul wrote:

One of the things I have been told by my lawyer is that holding property in a trust won’t protect your assets from creditors if I ‘benefit from’ the property.

This might be taken out of context or is a bit vague. First what are you trying to protection the property from? Creditors on bankruptcy? A trustee of a discretionary trust can still hold a property and let a beneficiary use it, perhaps rent free, if they have the power to do this. the property could still be safe from creditors on bankruptcy of that individual beneficiary. but there are still many potential ways the property and the trust could be attacked. So it largely depends on how the acquisition and funding of that property was structured within the trust.

charliefaddoul wrote:

Therefore, I have been told that it does not matter what legal entity the property is owned by, as if creditors are chasing any money, my assets would be exposed, regardless of what structures they are in.

You say ‘my assets’ but seem to be talking about a different entity holding the assets. If they are yours then they are available to creditors. If they are held and owned by a company, for example, then at first brush they are not your assets – but who ownes the company, how did the company acquire the property, how did it get the deposit. All this determines the strength of the protection

charliefaddoul wrote:

My accountant gave the opposite advice, stating that the assets would be protected.

They would not be qualified or knowledgeable to give this advice – or covered by insurance.

charliefaddoul wrote:

Can anyone confirm this or provide an alternative view as it is becoming increasingly frustrating when the advice from accountants and lawyers do not match up?

I am a tax advisor and a solicitor (and lawyer) and your understanding seems to be defective so you might be asking the wrong questions and getting answers to these instead of learning how a trust or a company could help reduce the likelyhood of assets falling into the hands of creditors.