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Protecting Your Assets & Wealth

Asset Protection

Here we answer six of the most common questions related to Asset Protection so you are best positioned to protect your wealth, whatever happens.

Knowledge is power, and with it we can tactically create solid foundations to craft a more financially secure future for ourselves, our friends and our families.

What can I do to protect my assets? 

When we fall into debt, one of the biggest concerns we face is how to protect our assets. Whether it’s your home, your car, or other property of value, you may be concerned about them being taken and sold for payment of your debts. 

It is true that debt enforcement agents will attempt to recover debts for creditors and the courts by removing and selling your assets of value. This could include removing your car or personal property from your home, or even seeking a charging order to secure the payment against the value of your house. 

Whilst there are many different forms in which enforcement action may be taken, a private trust can help protect it against such action because property that is not in the name of the Debtor is no longer vulnerable to enforcement.  

What is a trust? 

At its most basic, a trust is a legal structure that can hold property for the benefit of others (beneficiaries). This requires a settlor (someone who puts the property into the trust), a Trustee (someone who administers the trust for the benefit of the beneficiaries), and a beneficiary (someone who benefits from the trust property or fund).  

For example, a very basic type of trust may be set up by a parent (settlor) who places funds into it to cover a child’s (beneficiary) university education costs. The funds allocated, once settled into trust are no longer the parents. These funds are looked after by the trustee who administers them in accordance with the trust aims and beneficiary’s interests.  When the child goes to university, it can access these funds to pay for their education.  

Who owns the trust property? 

In this scenario, the parent no longer has legal ownership of the property settled into trust and it is therefore protected from third parties or debts in the parent’s name, providing it has been correctly structured and executed.  

The child owns a beneficial interest and can receive the benefit of the funds for that purpose, but it is not their direct property and the details of the trust fund is kept private by the structure of the trust.  

The trustee neither owns or benefits from the trust property but has legal control of the property in undertaking its obligations in administering it and upholding the trust. 

Are all trusts the same? 

No. There are a variety of trust structures and types, and not all will be suitable to protect your assets against third-party claims.

There are often several steps required when settling property such as houses and vehicles, including registration of the trust at Land Registry or DVLA, however, when correctly administered, a trust can be the ideal protector of assets since the legal title or ownership of the property must match the name of the debtor for debts to be enforceable against it.

Simply put, the property must be ‘the goods of the debtor’.  

For example, if your car is placed in trust, and the V5 document is registered to the trust then it will no longer match the ‘debtors’ name.  It is held for the beneficial use of the beneficiaries of the trust.

In addition, the trustees must keep the details of the trust private and not divulge the beneficiary’s details to third parties, in accordance with their Trustee obligation of confidentiality. 

Are there any other advantages other than protecting against debt enforcement? 

Yes. Another advantage to placing your assets into trust is to limit liabilities such as Inheritance Tax when they pass from generation to generation. Trust structures can allow the beneficial interest to pass from one person to another without any material change of ‘ownership’ required, rendering the property exempt from such taxes.   

It may also prevent a property from being sold for care costs in later life when councils demand a property be sold to pay for costs that would otherwise be met by the state.  

Are these legally recognised? 

In the UK, trusts are a well-established and respected structure upheld by both Common and Statute Law making it an attractive option, however, this is a big topic and it’s always best to seek out the right information to decide which form of trust structure will best suit your circumstances.   

Educating yourself in trust and equity is a worthwhile pursuit if you wish to protect your hard-earned assets. 

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