Protect your assets

01 April 2008 FAnews

A trust is an excellent tool for protecting your assets, ensuring that those you nominate, and not the state, the taxman or your creditors, will enjoy the fruits of your hard work. In this first article in our new series on trusts, we look at why you need to protect your assets.

Since a Discretionary Trust is not owned by anyone, is totally separate from the persons who have formed it, control it and benefit from it, and cannot die, it affords total asset protection, estate duty and capital gains tax savings, and a myriad of other benefits.

When you need it

As individuals we face a number of potential situations, which can result in us losing all of our hard earned assets, cash, investments and properties. For example:
* Your business may end up in trouble, leaving you to pay the outstanding debts and salaries.
* If you are retrenched, for any of a variety of reasons you may be unable to meet your obligations, leaving your assets at risk to creditors.
* If you have signed a surety for any person or for your own business, you are exposed to that claim if it is not settled.
* Divorce is often an emotional time, and often irrational decisions are made, which could result in you being forced to part with assets which you did not intend to lose.
* You could face claims from your spouse's creditors if you are married in community of property.
* Your creditors could lay claim to your assets if you cannot pay your debts.
* You can face a claim for damages to another person's property and your assets could be attached.

Everyone is vulnerable

This paints a pretty bleak picture, but the fact of the matter is that all of us face the risk of our assets being attached by creditors or an ex-spouse. The good news is that all these situations can be avoided and contained through setting up a trust, or a combination of trusts, to safeguard your assets.

Act now

Once your assets have been moved into the trust, they no longer belong to you as an individual, and your creditors can no longer lay claim to those assets should you experience financial difficulties.

However, you cannot wait until you are in financial trouble to set up a trust – the Insolvency Act allows creditors access to assets that were placed in a trust for six months, or as long as 24 months, if the assets were moved while a person is insolvent. You need to act now.

More excellent benefits

But this is only one of the reasons why you need a trust. Don't miss the next article in our series to find out how a trust will protect your loved ones when you die and prevent your estate from being decimated by estate duty, executors fees and capital gains tax.

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