30CH,
Took your suggestion and did a google, and yes “Trustee is legal owner” sprung up everywhere. This leads me to question, what are the asset protection features of a trust?
Thanks for your comments everyone.
Sebastian
30CH
I have done some research(not on google) and have found that I was incorrect. Thank you for pointing it out.[withstupid]
As for the appointer, my understanding is that the appointer can make suggestions to the trustee, but the trustee does not have to listen. The only thing the appointer can do to override the trustee is to wind up the trust, at which point the trustee must do so but then distribute funds as the trustee sees fit(not the appointer).
I would be interested in hearing your comments.
CATA
Asset Protection Specialist
[email protected]Most Discretionary Trust deeds allow the Appointor to remove and replace the Trustee whenver the Appointor wants to, for any reason or no reason. Thats why the Appointor has the real control over a trust.
A Discretionary trust still has very good asset protection advantages. The asset protection benefits are for the beneficiaries. The point is that the beneficiary doesn’t own what is in the trust. If a beneficairy is sued then the creditors cannot say to the beneficairy “you own that asset, put it up for the creditors” – from the beneficiaries’ point of view what you don’t own you can’t lose.
There is no asset protection if the Trustee becomes liable for a debt which is incurred out of the trust eg a trustee owns a porperty, someone slips over and succesfully sues the property owner. The trustee is the property owner and has to pay the damages.The trustee is entitled to draw money out of the trust (or sell the house if he has to) to find the money to pay the damages.
If a trustee incurrs a debt which has nothing to do with the trust property then the trust assets are protected eg a person’s dog bites someone and as the dog owner he has to pay damages – if he is a trustee for a trust, which is nothing to do with the dog, then the debt is nothing to do with the trust, so the trust assets are protected.This is the legal opinion of the barrister that I use.
It is a semantic division which the law adopts: The trustee owns the trust
assets in name only – the benefit of those assets (enjoyment of them) is the
sole exclusive right of the beneficiaries of the trust. Hence, if the
trustee is sued in a personal capacity (unrelated to management of trust
assets) the claimant has no right to the trust property, as the trustee does
not have ‘full’ ownership of this property.The appointer has limited control over the trustee. The appointer can only remove or replace the trustee,but can not tell the trustee what to do. Lets assume that the appointer is not the trustee(or director of a corporate trustee).
The appointer has no control of what happens inside the trust.CATA
Asset Protection Specialist
[email protected]Interesting topic guys..
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