Trusts and Asset Protection

Terry my accountant doesn't believe in trusts. He says public liability insurance is enough. What do you think?

I don't think he is thinking about contractual disputes. What if you sign a long term lease for a business run by a company and give a personal guarantee? Insurance won't help you for this.

What if you go to vegas with some mates and there are a few comments on facebook with you later sued for defamation - no insurance for this of thing.

If you have an accident in the car, insurance will probably cover you. if you are an accountant and give incorrect tax advice insurance will probably cover you. But if you are an accountant and give legal advice, inadvertantly even, then the insurance will probably not cover you.
 
With my line of work I have a low risk of getting sued so he reckons public liability insurance is enough for me and trade under a company. Leave property under my name to claim negative gearing. A lot of accounts I talk to don't like trusts. I'm guessing due to the extra work involved?
 
With my line of work I have a low risk of getting sued so he reckons public liability insurance is enough for me and trade under a company. Leave property under my name to claim negative gearing. A lot of accounts I talk to don't like trusts. I'm guessing due to the extra work involved?

99% of people will never sue or be sued.

But what if... you change jobs, start a business, become a developer, get more property, enter a contract you cannot complete, defame someone etc.

Also a trust can be used in a way to protect assets without it actually owning the property.
 
LOL - how true. I thought it would never happen to me, suddenly I had 5 or 6 running at once. Stuff happens and you just can't see it coming.

I've never been sued, but I have sued someone - and there is a chance you will lose even if you are in the 'right'.

Ausprop can you tell us what happened?
 
Terry my accountant doesn't believe in trusts. He says public liability insurance is enough. What do you think?

Insurance is a good idea. When a claim occurs the insurer will appoint a lawyer at their own expense and defend the claim. However don't count on them representing you. They can, and will, settle against your interest. That's their choice. That what insurers do.

The trust should also have that same insurance. The trust benefits are different. Asset protection doesn't mean legal defence protection. I suspect the accountant has an over simplified view. Its a bit like suggesting a trust doesn't need workers comp as the worker cant sue the trustee. Of course they can.

A trust isn't a shield of invincibility that prevents legal actions. It is best used as a safeguard to prevent a Director personally owning assets. That distance can be important. Asset protection requires personalised legal advice. Its useless as a last moment strategy.
 
I've never been sued, but I have sued someone - and there is a chance you will lose even if you are in the 'right'.

Ausprop can you tell us what happened?

"there is a chance you will lose even if you are in the 'right'". Requoted for emphasis - ANY litigation is at very best 50/50 because the system is an overloaded and incompetent mess. As a JP said to me the other day... may not have it right but what he said made sense, there are only 3 people that go to court, rich people, poor people and fools... think that was it! I think what most punters don't appreciate is the cost of pursuing anything, even if categorically right. Lawyers need to be upfront - if you commence a supreme court action you may as well transfer $200k into their trust account now so that you can be sure you can finish what you start. Of course being a lawyer cuts the costs of that!

I actually plan to write a lot of it up in a book one day because commercially I think it is quite interesting. I can't go into a lot of detail as some is yet to commence, some is ongoing but the issues covered:

- failure to complete an OTP purchase
- pursuit of specific performance against a vendor.... this one has been going for over 8 years, waited 14 months for trial judge to hand down decision and when he did it was a complete mess and I lost. fortunately I won on appeal. This case has everything in it from contract law, consumer rights, statutory demands, wind up applications, property seizure orders, caveat challenges, professional negligence, you name it it's there
- insolvent trading allegation for a liquidated company. got rid of that but they are a little scary as the insurers are not completely rational and have deep pockets
- a house that was supposedly complete and the bank settled on it. Claim against the developer and the conveyancing lawyer for misrep and negligence. The lawyers acted for both parties and their insurer had to come to the rescue on that one, bet they don't do that again.

that gives you a flavour for it... basically typical property/business related arguments that roll out when it all hits the fan
 
... there are only 3 people that go to court, rich people, poor people and fools... think that was it! I think what most punters don't appreciate is the cost of pursuing anything, even if categorically right. Lawyers need to be upfront - if you commence a supreme court action you may as well transfer $200k into their trust account now so that you can be sure you can finish what you start. Of course being a lawyer cuts the costs of that!

Ausprop, that sounds terrible and stressful. I think it's true-- only rich people, poor people and fools go to court. The cost of pursuing anything is astronomical and the only winners are the lawyers. They won't scratch themselves for less than $10,000 (sorry lawyers). Even when you have all the evidence, there is uncertainty. If you go chase $100,000 you'll spend another $100,000 in legal fees. And the lawyers want the money upfront in their trust account. I know that some people don't have a choice. My sister and her husband spent $600,000 in legal fees on one matter that went to the High Court on appeal.
 
Haha I think I'm getting the hang of trolling! :p

Seriously, I just Googled "how much does a QC earn?" and fell off my chair. Why? !
 
I am not expensive. I do have a European car, but a cheap one and I don't drive it much.

The most expensive lawyer I have seen is a barrister and he was charging $1400 per hour. But it takes a lot of education, experience and skill to get this far.

I charge $550 for a 2+ hour meeting. There are plumbers that charge more than me, hair dressers even.
 
I am not expensive. I do have a European car, but a cheap one and I don't drive it much.

The most expensive lawyer I have seen is a barrister and he was charging $1400 per hour. But it takes a lot of education, experience and skill to get this far.

I charge $550 for a 2+ hour meeting. There are plumbers that charge more than me, hair dressers even.

Ha, and I charge $0, $6 or $18 as a one off fee depending on the sort of matter. I guess we aren't good examples of lawyers overcharging eh.
 
I have so much admiration for commercial lawyers - and I am quite serious (note: there aren't many good ones though). A good lawyer needs to be masters across so many skill sets - they need to be:

- tough
- cunning
- smart
- educated across broad subject matter
- incredibly literate
- memory as big as an encyclopedia
- street fighters
- gentleman and thugs
- negotiators
- commercially minded and understand business
- importantly: a politician and understand which judge likes who and how their families are related, who knows who and who wants to get who. How to adapt your strategy depending who hears your matter
- understand the dynamics of business around town and why certain things are as they are and when you can ride that situation (or otherwise)
- an actor with a poker face

I remember after a 5 hour hearing on someone elses matter in the SAT I said to our lawyer that I was physically exhausted. he said it's also normal when you start out in trials, your adrenalin runs high even tho you are just sitting still and you need to learn to disengage from the small ebbs and flow

it's a job I couldn't do and for that I am happy to pay for good service
 
Little bit off topic but why are lawyers so expensive?

A good lawyer isn't expensive. A good example was a tax dispute running for years without settlement at a massive cost. I introduced client to my preferred ATO negotiator. It settled for way below expectations in two weeks. Best money spent. This lawyer admitted in first (free consult) meeting he was very expensive - $1400+ a hour. But he qualified it by saying he would do a hell of a lot for that rate and use his staff who were cheaper.

$20K to end a multi-million dollar problem = priceless.
 
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