Don’t break the trust
Trusts may be established for a variety of reasons, one of which is to protect assets from creditors in the event of a business failure, says Bernard Sacks, Partner at audit, tax and advisory firm, Mazars. However, he says that, in reality trusts offer little protection in this regard if they are not structured and administered properly.
The courts state that in order for a trust to be recognised legally, all trustees should reach decisions unanimously, as technically they have joint control of the assets. Any transaction that is made has to be approved by all trustee members, or the transaction in question will be considered unlawful. It’s also vital to ensure that the trust is treated in every way as a separate entity.
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