It is possible to hold assets in different structures, each structure having various degrees of effectiveness. These structures include:
- personal ownership of property;
- parents or Guardians owning assets; and
Assets that are personally owned are not protected from creditors. However, a possible method of providing a form of asset protection against your creditors where the asset is held in your name is for parents, guardians or others to loan you the money which is used to purchase an asset, subject to a mortgage for the entire value of the asset. Transferring ownership of assets to your parents or guardians or other parties can also achieve this.
A trust could be a far more effective means of managing property and assets where the above options are not feasible. A trust means a legal means by which an owner of property (the Settlor) can appoint a person or company (the Trustee) to look after property (the trust property) for the benefit of another person (the Beneficiary).
The most common scenario where the need for a trust will arise is where parents or guardians have a dependent child who cannot look after property by themselves. However, a trust may also provide significant asset protection, as they must be exercised for the benefit of the beneficiary but are not legally owned by the beneficiary themselves.