The structure setup doesnt need the complexity and the liability issues in the former post. This isnt commercial. "Master trusts" are a structure some may suggest but its largely a tax problem with intertwined loans between entities (all trusts) with no comercial basis and no asset recourse. In short, a sham. Having siucessfully survived many client Wickenby cases the word "loan" to me sends shivers up my spine. The ATO view on related party loans can by very different to that of a written loan agreement.
Happy to discuss offline. Email or call.
The structure I discussed above is not for taxation reasons, although I have survived a couple of audits over the last 15 years that I have been doing it. And a top tax law barrister I brief also supports it. If your intention in using such a structure is tax avoidance then you are in trouble.
The structure is about protecting what you have created. Developments do go bad. I have 3 clients who have gone personally bankrupt (all business related personal guarantees rather than developments). They lost control of the company that was running the business, 2 lost their PPOR also. BUT they are the beneficiaries of trusts that have significant assets and income. Their trusts were also secured creditors of the companies that went under. During bankruptcy they are able to receive distributions from trusts up to the specified income level that year and not have any issues. Losing a development/business etc and going bankrupt still hurts, and hurts a lot. But if you have a correct structure in place you do not need to lose everything.
You are creating a vehicle (the finance trust) that contains the majority of your wealth, for the benefit of your family and with very little chance of losing it. To get to this trust a litigator or liquidator would need to successfully argue that the structure is an alter ego of the beneficiary. Very hard and very expensive thing to do.
This structure can also stop litigation at the first instance. When a no win no fee lawyer looks at taking on a client they have 2 big concerns:
1. Is there an actual claim; and
2. If successful can the party being sued pay (pref insurance).
The biggest judgement in the world is useless if you are unable to get any money.
By taking a second mortgage over a property or a charge over a business (assuming that the trustee does not have a name resembling the person being sued) , a no win no fee guy does a search on the property and sees that it has a second mortgage. So if the claim is not one where there is an insurer to pay then you are already placing doubt in the no win no fee guy's mind. If they are in one of the bigger practices then there is no shortage of people coming through the door and it may not go further. If it does go further, your entity is a secured creditor anyway.
