I’ve been reading the Jan 05 of the API on the story of Julia Legian. On p44 she mentions that “once a trust has acquired $500,000 of property, she sets up a new trust, for additonal asset protection”. She has a discretionary trust.
Why is that ? Why would that offer additional asset protection ?
I would guess because if the trust (trustee) got sued for some reason, all the assets of that trust would be at risk. However, assets of other trusts, even if controlled by the same trustee, would be safe.
Too many trusts though would mean too much overhead in operating them, so the value at which a new trust would be started would be a trade off between the gain in asset protection and the cost of operation.
That’s my thought anyway…
GP
I agree with GP. eg. if a tenant had an accident in one of the properties and sued the owner, the trust(ee). all the assets in that trust then would be at risk.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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