Added Legal Value Newsletter Volume 1 Number 7

17 July 2008

More on estate planning

In our last issue we explained how to protect company assets from personal debt by placing the shares of the company in a trust.

But what about the debt of the business? Place the assets of the business in a separate trust and try to avoid signing as personal surety for the debts of the business. The effect will be that your personal assets are safe in one trust and your business assets are safe in another.

What is a trust?

It is something you should have. Peter Carruthers, author of Crash Proof Your Business says lawyers make things too complicated. Everyone should be told to have a trust. He speaks as someone who on a personal level can appreciate the unexpected problems one faces when your assets are not properly protected by the use of trusts.
A trust is a structure where someone takes care of another person’s assets. The law then protects the assets against creditors of the caretaker. If Mrs A wants to safeguard her belongings, she can create the Mrs A Family Trust by donating assets to the caretaker ‹called a trustee› to look after them on her and her family’s behalf.
There can also be more than one caretaker. So a typical structure would be that Mrs A is the creator and Mrs A, her husband and an independent person ‹such as the family accountant or attorney› are the trustees while Mrs A, her husband and their children are the beneficiaries ‹the persons on whose behalf the assets are protected.›

Why is it good protection?

Risk is something you don’t always realize you have. If Mrs A runs into any financial trouble, “her” assets should be safe because they are no longer in her personal estate. They now belong to the trustees.
If the trustees run into personal financial problems, the trust assets are safe as the trustees do not own them personally. They own them only in their capacity as trustees.
If the trust beneficiaries run into financial trouble, the assets are safe as they do not own any of the assets. ‹They only have a right to receive benefits from the trust.›

Greetings.

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A prudent person sees trouble coming and ducks; a simpleton walks in blindly and is clobbered

We can register a family trust for you R1468.