Here’s an interesting one I came across the other day:
A couple had spoken with their Acountant and he suggested a property securely tucked away inside a TRUST. They naturally wanted to have something for their Retirement so they purchased the aforementioned property, and placed it inside “Their Trust”.
Fast Forward 14 years and let’s refinance our now $750,000 I.P. and purchase some more investment properties. We know Property doesn’t lose Value as a rule so it sounds great.
Loan Application submitted, Everything was Dandy. For the First 30minutes anyway. A Phone Call from the Lender –
“The couple applying for the loan aren’t listed as directors on either the Trust, OR The Corporate Trustee. In Fact they are beneficiaries ONLY. They aren’t even designated as the Appointor, The Accountants Wife Is. Unless these directors Agree to guarantee the loan this application is dead in the water.”
The couples response was to ask if we thought the accountant and his wife would guarantee the loan?
As one of my valued associates said – “There aren’t any lifeguards in the gene pool!”
My concern is this though – Legally the couple really have no recourse. They have assigned an asset they spent 12 years paying for into the hands of someone who now Not Only has essentially full ownership of the asset, but they also control the asset as well. So now is a great time to question who really owns your asset people?
This couldn’t have been a mistake. I’m wondering how many more this person has taken off the unsuspecting out there?
I guess all I can say is make sure you ALWAYS seek independant legal and financial advice because you have no guarantees the other person is really trying to look out for YOU…
Stuart Milne
Non-Conforming Specialist
READY Mortgages
http://www.readymortgages.com.au
[email protected]
Mob: 0404 056 055This is terrible. They may have some legal recourse in suing the accountant somehow.
Terryw
Discover Home Loans
Parramatta
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Terry, I unfortunately don’t know enough about Trusts and the way they are operated or structured to know if there is any recourse they can take. I posted it more as a warning then to see if anyone knew, but it would also be good if anyone had any ideas on what if any action they could potentially take to retrieve their asset?
Stuart Milne
Non-Conforming Specialist
READY Mortgages
http://www.readymortgages.com.au
[email protected]
Mob: 0404 056 055It goes to show that you must understand the structure. This is of the utmost importance.
I can’t imaging how I would feel in that situation. The couple could sue but would be up for legal costs (if they could afford it). I would ask the accountant to “PLEASE EXPLAIN”.
If there was not a good eplaination I would (I will edit this myself).
CATA
Asset Protection Specialist
[email protected]This reminds me of Micheal Hutchinson, lead singer of INXS. While he was making big money with INXS, he had a complex structure with offshore companies and trusts with nothing in his own name. He probably had other people controlling all this – nominee trustees and directors etc.
The trouble is, his family could not get their hands on the assets after his death. Firstly they probably didn’t know where most of the assets were, and secondly they assets they did find were controlled by other people.
I remember reading about this in the Sydney Morning Herald about a year ago. Very interesting.
Terryw
Discover Home Loans
Parramatta
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hi all
for me it would be relatively easy to find out who trustee was and then apply to change trustee at the end of the day until you wish to sell its not that important and should be able to be changed.usually acccountant are the nominee for a very good reason and that is if attacked you are outside the trust and so its harder to attack.
with out seeing the trust i on’t see this as a major problem my trusts are held by companies but with an accountant holding the nominee( or appointeee what ever they are called coastymike will know)
also if they have the property or ties
in a trust they don’t own them anyway they are held in trust for them thats the whole idea.
you can organise a company and you are the director of the company if you wish.
with regards to the lender and if the lend is in the name of a trust he will require to know who the trustee for the trust is.
the appointee is not the unit holders of the trust and the unit holders are the people that take the loan so the couple need to find out who the unit holders are and if thats the accountants then thats different but you will find thats not the case.here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]Hi again Stuart
Been thinking. The trustee is legally required to act in the best interest of the beneficiaries, so there may be still some hope. And as Gross alluded to, it may not be a case of fraud or deceit by the accoutant. He may have really had the best interests of your friends in mind.
14 years is a long time, and things were certainly much different back then. It seems like your friends must have been getting distributions of income from the trust during this time – or they would have complained sooner.
If it is a refinance, how did they get the loan in the first place?
What happens if the accountant’s wife dies? Who is the next appointer?
Your friends becoming trustees or directors of the trustee company may be easy, but it is the appointer that they really need to become as the appointer has the power to chose the trustee.
Terryw
Discover Home Loans
Parramatta
[email protected]
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I would also look into changing the apointer. Get the couple to speak to the accountant and find out the facts.
The only stumbling block would be if they do not want to give up there position in the structure, but it may be the case that 14 years ago it was the norm. As Terry said 14 years is a long time.
CATA
Asset Protection Specialist
[email protected]
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