Over the last few days I have been on a law course and made some new friends. One was a senior lawyer with one of the big tier law firms. He drafts trust deeds from scratch - yet he had no idea of how the asset protection side worked. He didn't know the consequences of the Bamford case which is one of the more recent and significant cases involving the taxation of trusts and he didn't about the bankruptcy act or much about the planning of succession for trusts. Nice guy though!
Asset protection - trusts and mortgages
- Thread starter beachside
- Start date
Its amazing how uncommercial and narrow thinking some of the big law boys can be. If they have spent all of their time inside that system, they have often had very little exposure to anything but their absolute niche.
That seems to be the type of site sols and conveyancers use to do the usual searches for sale of property. Do you have to pay for all enquiries, or only printed copies. Any that the general public can access .....cost?
Of course you have to pay!
You can also use the land titles web site or even go into the land titles office. Website searches cost money. $12 to $30 or so. It used to be free by going into the land titles office, but I am not sure about now. SAI could cost a bit more.
With asset protection wouldn't it be cheaper and easier to just mortgage everything to the hilt. Say 95% LVR.
Not sure of banks reaction if you tell them the loan is to protect assets. They will want to know what the money will be used for. Can you tell them I gonna bury the money in my backyard lol.
Then the bankruptcy trustee will want know where the money went. Could one get away with "spent it on wine,women and gambling" or will they look further.
I'd say getting the bank loan may be the hardest part.
Not sure of banks reaction if you tell them the loan is to protect assets. They will want to know what the money will be used for. Can you tell them I gonna bury the money in my backyard lol.
Then the bankruptcy trustee will want know where the money went. Could one get away with "spent it on wine,women and gambling" or will they look further.
I'd say getting the bank loan may be the hardest part.
Just be aware that if you were to go bankrupt you would be required to file a statement of your affairs. Withholding information or lying is a criminal offence. You must assist the trustee in bankruptcy find all of your money.
But if you have spent it then you don't have it.
Transferring assets to a spouse seems to be the surefire asset protection strategy of many a fallen Aussie entrepeneur.
http://www.couriermail.com.au/news/...being-bankrupted/story-e6freon6-1226578261275
Can the bankruptcy trustee touch assets transferred to name of spouse ? In the case presented above, it seems that the bankrupted man "owes" his wife a lot? Is this a valid protection strategy?
http://www.couriermail.com.au/news/...being-bankrupted/story-e6freon6-1226578261275
Can the bankruptcy trustee touch assets transferred to name of spouse ? In the case presented above, it seems that the bankrupted man "owes" his wife a lot? Is this a valid protection strategy?
If it was done before any business debts or risk of bankruptcy then it is fine (and is recommended). For example, when lawyers become partners in their law firms they always do this just before joining the partnership to remove the avoidance of doubt that it is a proper bona fide transaction. Otherwise the bankruptcy trustee can clawback the property.
What I find interesting with the presented case is that the bankrupt married his current wife after his company collapsed several years ago. Surely this must mean that all the assets he has passed to his wife and the millions that he owes her must be subject to clawback provisions?
It may be but the test is whether they transferred the assets knowing that the insolvency was forthcoming. Depends on the evidence adduced in the court but the standard is on balance of probabilities so not that hard to make out I would've thought particularly after the Cummins case.
Some good info on this post, thanks guys....
I have a quick question to add on topic (sorry to jumpin!):
When setting up a disc trust with corp trustee, can be set up under bro & sister and then beneficiaries are able to be members of both families?? (I have seen dymphna's model she talks abt husband and wife just wondering if it could be done tis way....)
Thanks in advance, so many q'son trusts and great info on this website!
R
I have a quick question to add on topic (sorry to jumpin!):
When setting up a disc trust with corp trustee, can be set up under bro & sister and then beneficiaries are able to be members of both families?? (I have seen dymphna's model she talks abt husband and wife just wondering if it could be done tis way....)
Thanks in advance, so many q'son trusts and great info on this website!
R
Yes. This can easily be done.
What if he sold these assets to his wife at full market value?
You will note the trustee in bankruptcy is investigating related party transactions.
There was also a recent case where a a few partners of a well know law firm went bankrupt. One sold a property to his wife for $1 just weeks before going bankrupt. You would have thought lawyers would know better (they were personal injury lawyers). This transaction has been got at by the bankruptcy trustee already with the wife agreeing to a settlement.
I have a few questions on the topic..
Purely for asset protection, my husband and I are planning on setting up a disc trust with corp trustee with both of us and my brother as directors of the company. As I'm an expat/non-resident, I'm told that I need to have a resident (my bro) as one of the directors. Would it be beneficial to minimize the no. of directors in a company and hence just only have myself and my bro as directors? and then beneficiaries of the trust and shareholders of the company would be just my husband and I?
Also, would the banks need personal guarantees from all directors of the company? or from all shareholders?
Thanks in advance!
Purely for asset protection, my husband and I are planning on setting up a disc trust with corp trustee with both of us and my brother as directors of the company. As I'm an expat/non-resident, I'm told that I need to have a resident (my bro) as one of the directors. Would it be beneficial to minimize the no. of directors in a company and hence just only have myself and my bro as directors? and then beneficiaries of the trust and shareholders of the company would be just my husband and I?
Also, would the banks need personal guarantees from all directors of the company? or from all shareholders?
Thanks in advance!
For asset protection you are best to have as few directors as possible as all directors will need to give personal guarantees.
But for control reasons you may want to be director.
You really need to look into the tax issues here too, as well as the Foreign Acquisitions and takeovers act (may or may not apply).
But for control reasons you may want to be director.
You really need to look into the tax issues here too, as well as the Foreign Acquisitions and takeovers act (may or may not apply).
Banks require all directors to give guarantees as the director is considered far more essential/important than a shareholder. Best to have the only resident as the director as guarantees from non-residents are NOT acceptable in many cases in accordance with bank policy. This is the case even if the director adds value such as income.
