Most of us probably know trust is a perfect vehicle to distribute income and save tax. However what most people don’t know is that it is also a perfect vehicle for assets protection. Some of the trust structures are poorly structured which will reduce the protection to the assets held on trust. In the following paragraph I want to show you a good example of trust structure for assets protection purpose.
The example I want to explain in detail in as follow
Ok let me explain how it works.
- If someone wants to attack assts of you or your partner, the assets/business held on unit trust is effectively protected and separated from the assets under your own name. That is because the assets are legally held by Corporate Trustee A on behalf of unit trust not by you and your partner
- If someone wants to attack assets held in your business in the unit trust, the lawsuit could only be against Corporate Trustee A as that is the entity holds the business. However the Corporate Trustee A is doing nothing apart from being a trustee company, therefore it owns nothing as well. The person attacking you will probably end up getting nothing if your trust is in the right structure.
- By having Corporate Trustee B holding the units on behalf of the family trust will increase the asset protection compared to mum and dad holding units by themselves. Why? If mum and dad get attacked by someone, the units held by them might be affected in the pursuit of lawsuit. If we add one more layer – family trust, the units are protected as they are only controlled by mum and dad but not owned by them.
hraccounting 
nice post.