This is a common flawed understanding. If units are difficult to redeem it stands that they are worhless or at least worth less.
If the terms of a trust deed contain a explicit clause which says "the trustee may refuse to redeem a unitholding where a creditor of the unitholder demand or seeks rights over the units to satisfy a debt" ...how can the trustee comply ?? Court ? Perhaps a mere stalling tactic ?
I have seen this clause used very effectively to prevent the ATO demand upon a SMSF member (over her preservation age) to enforce a large debt. The trust deed contained a explicit prohibition within the deed that did not grant the Trustee any authority to pay any notice, demand or order of the ATO or any Court, Tribunal or a request, demand or orders of any person comprising the Judicature of the Commonwealth of Australia",and they accepted it. Didnt even proceed to Court. I wonder what may have occurred if it had....They did too they admitted later. It would seem unlikely that a tax debt could be barred by the trust deed. Perhaps it can...The consequences may be dire however. ie Non-complying. Maybe just a stalling tactic ??
