HDT etc
Further to what Nick has said, I think people are getting (quite understandably) a bit confused about the asset protection side of things.
In a nutshell, there are two angles you're looking at as a property investor.
1) in your job or everyday life, if somebody ends up suing you successfully and gets a judgment against you which you can't pay and then seeks to enforce against your assets and perhaps bankrupt you, the key asset protection strategy which using a discretionary or Hybrid discretionary trust provides is that YOU DON'T ACTUALLY OWN PROPERTY that can be enforce against. The equitable right you have to be duly considered by the trustee of your trust is NOT property available to creditors or the Bankruptcy Trustee.
2) In your position as a landlord, if someone is injured in connection with one of your properties then they may sue the landlord. BUT WHO IS THE LANDLORD? NOT YOU PERSONALLY, EITHER YOU AS TRUSTEE OF THE TRUST OR A COMPANY WHICH YOU CONTROL AS TRUSTEE OF THE TRUST. So (absent any breach of directors' duties under the Corps Act - which would be pretty unlikely) your personal assets and personal credit history etc is in the clear and only the assets of your trustee company in its own name (probably $2) and those held within that trust are at risk. This is one reason not to have all your eggs in one trust basket. (The trust assets will be at risk due to the trustee's right of indemnity out of the trust assets. Whilst this can be negatived in the trust deed itself, it will cause financing difficulties...
As always, seek professional advice before doing anything.
end of sermon
N.
Further to what Nick has said, I think people are getting (quite understandably) a bit confused about the asset protection side of things.
In a nutshell, there are two angles you're looking at as a property investor.
1) in your job or everyday life, if somebody ends up suing you successfully and gets a judgment against you which you can't pay and then seeks to enforce against your assets and perhaps bankrupt you, the key asset protection strategy which using a discretionary or Hybrid discretionary trust provides is that YOU DON'T ACTUALLY OWN PROPERTY that can be enforce against. The equitable right you have to be duly considered by the trustee of your trust is NOT property available to creditors or the Bankruptcy Trustee.
2) In your position as a landlord, if someone is injured in connection with one of your properties then they may sue the landlord. BUT WHO IS THE LANDLORD? NOT YOU PERSONALLY, EITHER YOU AS TRUSTEE OF THE TRUST OR A COMPANY WHICH YOU CONTROL AS TRUSTEE OF THE TRUST. So (absent any breach of directors' duties under the Corps Act - which would be pretty unlikely) your personal assets and personal credit history etc is in the clear and only the assets of your trustee company in its own name (probably $2) and those held within that trust are at risk. This is one reason not to have all your eggs in one trust basket. (The trust assets will be at risk due to the trustee's right of indemnity out of the trust assets. Whilst this can be negatived in the trust deed itself, it will cause financing difficulties...
As always, seek professional advice before doing anything.
end of sermon
N.
