Hi everyone,
my brother and his friend just formed a company. To my horror when I looked at the papers last night, My brother is the only trustee and his friend is the only appointor. They are both beneficiaries.
I don’t like the situation, I think there may be some nasty consequences if the partnership goes sour, and I wish he had gotten some legal advice before signing!!!
Does anyone have a great understanding of company law who may be able to comment on what the obligations of a trustee are?????
CATA are you there???????????????????????
what can he do to get out of it?
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582Hi Dr X
I will assume that there is a company trustee and he is the director.
From my understanding the trustee is responsible for what the trust does.From what I have read, your brother is possibly in the best position if the partnership goes sour.
Your brothers friend is the appointer who can only make suggestions to the trustee. The appointer can tell the trustee to wind up the trust and the trustee has to listen in this instance only.The trustee has absolute discretion in the dealings of the trust, and if the appointer tells him to dissolve the trust, it is still at the trustee’s discretion which beneficiary receives the money.
Hope this helps.
Is there a company trustee?
What type of trust?
What is the trust dealing with?CATA
Asset Protection Specialist
[email protected]Hi Cata,
thanks for the reply. My appologies on being so vague. It is a discretionary trust, without a corporate trustee. My brother IS the trustee of the trust!!!!!I have not seen this before as all our trusts have company trustees.
I know the appointor can remove the trustee and appoint another trustee. This is what I dont like.
Also, what happens in the case of a legal dispute. Wouldnt the trustee be the first to get sued?
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582the trust deals in computer software!!!
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582Originally posted by Dr.X:It is a discretionary trust, without a corporate trustee. My brother IS the trustee of the trust!!!!!
I have not seen this before as all our trusts have company trustees.
I know the appointor can remove the trustee and appoint another trustee. This is what I dont like.
Also, what happens in the case of a legal dispute. Wouldnt the trustee be the first to get sued?
Why not have the appointer remove your brother as trustee and place a company as trustee?
Yes the trustee is liable, thats why most use a $2 company trustee(non trading company)
CATA
Asset Protection Specialist
[email protected]thanks cata, thats what I thought!!!!!
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582Glad to be a help.
I am currently looking into the possiblity of changing appointers’. I will let you know what I find.CATA
Asset Protection Specialist
[email protected]that would be interesting thanks!
My brother got in contact with the appointor and asked him to remove him (my brother) as trustee and appoint either a company or himself (the appointor). He said he would!
How can we check if he has or how can the trustee legally remove himself if the appontor objects?
this is a great learning curve on trusts, I think I have learned more in the last couple of days than I have my entire life!!!!!
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582Originally posted by Dr.X:My brother got in contact with the appointor and asked him to remove him (my brother) as trustee and appoint either a company or himself (the appointor). He said he would!
How can we check if he has or how can the trustee legally remove himself if the appontor objects?
Think about a company trustee with both partners as directors. If your brothers partner is appointer and trustee then he has absolute control of the trust and what is in it.
I don’t see why he can not resign as trustee.
CATA
Asset Protection Specialist
[email protected]Another thing to think about is if they are going to be borrowing money via the trust. It is usually the trustee that has to guarrantee the loan, therefore having just one trustee will mean they are the ones taking the risk in this regard too. Not good risk-wise and not good from a serviceability point of view either.
Terryw
Discover Home Loans
Parramatta
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
yep thanks Terrym we thought of that too after the fact. My brothers knowledge of legal structures is close to zero and mine is just above that.
he really had no idea what he was signing until I looked at the papers a couple of days ago and questioned why he was a trustee. I think the friend is an opportunist trying to get away with limited liability. If anything, this act flags the “friend” as an untrustworthy person and one to caution doing business with in the future. It also tells my brother to be careful what he is signing.
and anyone else for that matter!!!
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582Lesson for everyone here DrX..
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorThis mght be a naive question [blush2] but can trustee and / or several beneficiaries be residents overseas?
Spare some time and share some valuable insights. They are always appreciated and will help to jump start someone new to PI.
An offshore trustee can be done but will need an offshore trust and an offshore accountant also.
Offshore beneficiaries I can not see a problem. I have never done it and would need to look further before I did.
Intresting question.CATA
Asset Protection Specialist
[email protected]We have NZ properties held in a NZ-based trust with a company trustee. We are the beneficiaries of the trust, although we are OZ residents. So I guess it can be done!!!
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582Thanks Cata and Dr X
So it looks like I will look further into setting up a Australian Company to be the trustee for an Australian based trust. Beneficiaries can be residents or non-residents – it does not make much difference as each individual handles their own finance matters upon receiving the payments.
Or alternatively, set up an Australian trust where an individual who acts as trustee will be an Australian resident.
I think i better get a pen and draw some diagrams.
Alex
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