Asset Protection - Options & Trusts

[Ebbie]

On page 74 of the Dec 2005 edition of API magazine Rob Balanda talks about protecting property already held in your own name.

He suggests you could grant an option allowing your trust to buy your property for a price equal to the amount of the loan over the property. Basically if you get sued the litigant can't sell the property and access the increased equity because the trust will exercise the option and benefit from any increase in value, rather than the creditor.

This sounds fairly simple when compared with the other methods like second mortgages and cross securitisation (overstamping) etc.

Would anyone like to have a go at pointing out the advantages/disadvantages of doing it this way?

[geoffw]

On page 74 of the Dec 2005 edition of API magazine Rob Balanda talks about protecting property already held in your own name.

He suggests you could grant an option allowing your trust to buy your property for a price equal to the amount of the loan over the property. Basically if you get sued the litigant can't sell the property and access the increased equity because the trust will exercise the option and benefit from any increase in value, rather than the creditor.

This sounds fairly simple when compared with the other methods like second mortgages and cross securitisation (overstamping) etc.

Would anyone like to have a go at pointing out the advantages/disadvantages of doing it this way?Pages 72-75 in my edition :D

What you mention is just a single paragraph in a four page article- and the strategy is mentioned in conjunction with leasing your PPOR to a related trust.

That's getting to complex territory.

Rob Balanda has done some excellent stuff in regard to investment properties. He has a lot of good ideas in regard to options, JVs and the like.

But I'd really point to his final point- "Get professional advice"