A MAJOR PART OF THE ASSET PROTECTION STRATEGY IS THE CREATION OF A TRUST. IF YOU WOULD LIKE TO FIND OUT MORE BEFORE YOU PROCEED WITH THIS SECTION, OR NEED HELP ANSWERING ANY OF THE FOLLOWING QUESTIONS ASKED, PLEASE CLICK ON THE “INSTRUCTIONS AND FAQ’S” HEADING IMMEDIATELY BELOW. YOU CAN CLOSE THIS HELP SCREEN BY CLICKING ON THE HEADING AGAIN.
A Trust is a legal entity which is administered by a Trustee. A Trust cannot act alone – it owns assets, earns income and holds wealth via a Trustee. The Trustee is the person or entity in charge of running the Trust. It can be one or more individuals or a company. All of the wealth belongs to the Trust NOT the Trustee. Trustees can be changed, but the money and assets remain in the Trust. The Trust deed is a document which sets up the Trust. There is no Trust until a Trust deed is prepared and signed by two parties – the “settlor” who is in charge of setting up the Trust and the Trustee who runs the Trust. The Trust deed sets out the rules of the Trust.
The name of your Trust is entirely a matter for you. As a guide, it would be best to choose something which means something to you, but which has no obvious connection to you. We are trying to divert creditors away from you and protect you, so I would not be calling my Trust “The Dominique Grubisa Trust” for example – I would call it “The Sicilian Trust” or something like that. Maybe think of favourite holiday destinations or the like.
A Trustee for your Trust can be either an individual over 18 years, or a private company of which you, or another individual over 18 years are a director/s (it is not necessary that you be a director of this company for it to be eligible). It is ultimately up to you which option you choose, as both are legally effective.
An individual is good because there is no register for individuals in Australia (like there is for companies with ASIC) so that your Trustee is “off the radar”. The down-side is that you have to involve a third party in your affairs. You may need them to sign documents from time to time for you, so you will need to consider any logistical difficulties with this eg do they live overseas? They will also know about your financial affairs and may hold a bank account for you. The statements for the account can be re-directed to you of course, and you as a signatory will control the account and can operate it like any other bank account you may have, but there will be this third party involvement.
Choosing a Trustee is the most important part of asset protection, and you need to give this some thought. We need someone separate to you and your wealth, so a spouse or partner is not the best choice – even though you may trust them implicitly. We do need someone you trust, as they will be privy to your financial information – your assets, income and if you choose to set up a bank account for the Trust, your cash at bank. Common choices are siblings, parents, children or very close friends. Your lawyer or accountant are probably not appropriate candidates unless they are also your close friends. You should ask the person first, as there is no point in listing them as a Trustee, and us preparing all the documents, if they then refuse to act as your Trustee. You should also ensure that they understand the responsibilities that you are asking them to undertake. If you do not have an individual you feel comfortable using as your Trustee, then you can incorporate a company to act as your Trustee
A corporate Trustee means that you set up a company to be your Trustee. This involves registering a company with ASIC with you as a director. This means you have a separate legal entity as your Trustee, but you are a director of that entity and so no one else is involved in your affairs. The downside is that it costs to register a company ($485), and ASIC additionally charge yearly registrations fees ($220). The company will be a matter of public record and anyone can find out about it and search for it on the ASIC website.
You can use a shelf company you may already have if it has never borrowed or earned income. You do not want to use a company that is “contaminated” by its previous dealings. If it has earned income before, then you should start afresh with a brand new company.
You can set up a company online at any time at ecompanies.com.au for a cost of $483.00.
You can find the details of your company’s ACN on the Annual Statement issued by ASIC for your company, or by requesting this information from your accountant. You can also search for the A.C.N on the ASIC website (asic.gov.au/search). Go to the “Search ASIC registers” in the right hand panel, search within “Organisations& Business Names” and where it says “for”, type in the name of your company and click on “Go”.
Only one director needs to be sign the documents, even if your company has have more than one director. The one that should be listed where requested on the questionnaire is the one who is both authorised and available to sign the Asset Protection documents. It is not necessary to advise us of who the other directors are.
You can find the details of the registered office of your company on the Annual Statement issued by ASIC for your company, or by requesting this information from your accountant.