I have a few questions about asset protection:
1. If you have a $2 company as a trustee & the trust and/or company is sued for whatever reason, they would only be able to get the value of the shares owned by that company. So if that company initially issued 100 shares at $1 each to the shareholders, then they could get $100. Is that correct? So it would be best to have one share issued at $1 only, so they could only get $1?
2. Offset Accounts – Say you have a loan on a property worth $400k that has a $200k loan & $150k offest account which has $0 sitting available to use, that would mean in essence that the property has a $350k mortgage on it leaving only $50k equity at risk. If you put in $100k cash into that offset account, then your loan would be $200k+$50K ($250k). Does that mean that only $50k in equity is only at risk? Or since you have $100k sitting available in the offset account, it would be treated as $100k in a savings account & then it would also be sitting unprotected?
3. Hiring tradespeople – Sometimes Property Managers are slow & it's quicker & cheaper to find your own tradespeople directly to fix things. Should you always get your Property Manager to hire tradespeople to do work on your property? So they will check they are qualified & have the adequate insurances? That way if they don't, you can sue the Real Estate Agency? Does this way limit your risk & liabilities rather than finding the tradespeople yourself?
Copy and paste of my answer from the other forum
hmmm
1. 1 share – what if you want to bring in someone else later on? I wouldn't worry about losing $10 or $100.
I would be more worried about losing the assets of the trust. If the trustee is sued the assets of the trust are at risk, if these are not enough then the assets of the trustee will be exposed. This is why a company is suggested as it limits liability.
Also consider the many instances where directors can be personally liable.
2. Cash in an offset is an asset. It would be exposed and at risk. If the owner takes it out of the offset and moves it, it would still be exposed and at risk. Doesn't matter where it is.
3. If your agent hired a handyman who was not properly licenced then the agent may share some of the blame.
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
Thanks for your comments Terry. I have replied back on the other forum with a few questions following your response.
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