The Advantages of a Corporate Trustee Our core purpose is ‘HELPING CLIENTS ACHIEVE FINANCIAL SECURITY’ MULCAHY & CO | P 03 5330 7200 | INFO@MULCAHY.COM.AU | 300B GILLIES ST NTH, BALLARAT
ASSET PROTECTION AND LIMITED LIABILITY One of the most important reasons to have a corporate trustee is asset protection and limiting liability. Individuals acting as trustee are jointly and severally liable for any actions taken against the trust, as they hold the assets of the trust in their individual names. If a claim against the trust were to exceed the assets held by trustees for the trust, the personal assets of the individuals acting as trustee may be at risk. On the contrary, companies have limited liability which ensures litigation against the trust is limited to the assets held in the name of the company and do not stretch to the directors of the company. Generally, the director’s personal assets are therefore safeguarded.
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CLARITY AND SIMPLICITY With a company whose sole purpose is to act as trustee, it is clear the assets held by the company as trustee are those of the trust. This is safer than risking confusion which may occur with mixing up individuals own assets with those held as trustee (given trust ownership is not generally identified on legal documents, so hence is not contained on certificates of title for instance). Utilising a company makes it simpler to reflect a change in persons involved in the trust. Rather than replacing a personal trustee and transferring assets into a different name, it is much simpler to change the directors of the company. The assets are still held in the same name, that is the name of the trustee company, despite a change in underlying control of the trustee occurring.
PERPETUITY Where a company is a separate legal entity, it continues indefinitely. Having a company as trustee simplifies succession planning for the trust. If an individual acted as trustee and something were to happen to them, transfers would need to be effected to remove assets from their name and into a new trustee. With a company as trustee, this is simply a matter of changing the director. The company as trustee for the trust continues to hold the assets and no transfers are required.
PLANNING BENEFITS
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WHAT DOES BEING FINANCIALLY SECURE MEAN? It means assessing your personal and business goals and developing a plan to achieve them. 1. Goals & objectives 2. Estate plan 3. Risk plan 4. Asset protection plan 5. Taxation plan 6. Debt plan 7. Retirement plan 8. Business plan 9. Superannuation plan 10. Investment plan FOLLOW OUR 10 STEPS TO SUCCESS TO ACHIEVE FINANCIAL SECURITY... Visit www.mulcahy.com.au for more information
A company trustee allows control of assets and businesses to be changed over a period of time without the need to change legal ownership. This is a very useful tool for succession and estate planning.
IMPORTANT DISCLAIMER: This document does not constitute advice. Clients should not act solely on the basis of the material contained in this document. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly and we therefore recommend that our formal advice be sought before acting in any of these areas. This document is issued as a helpful guide to clients and for their private information.
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