Here's John's last query and my response. After this piece of advice John managed to resolve the dispute and move on with his business. Without court proceedings!
I have one more question to ask, and I am absolutely more than willing to pay for your time – I am not asking for a freebie. So, please send me an invoice. (I didn't)
With respect to this contract:
They have done some work and that is what they are claiming costs for, however…
After they had done the work, and they had invoiced me for this work, I rang the guy up and complained and after a bit of argument, I said “I don’t want to pay and I want you to cancel the invoice” to which he eventually said “Well, you are the most difficult customer I have ever had and I don’t want to have anything more to do with you, so we will just walk away and leave it then.” And I said “good thanks”
Now, isn’t that an offer to cancel everything and walk away? I accepted it.
The next day he changed his mind and said in an email… “where you have AGAIN agreed to withdraw the invoice” that’s just confusing & misleading. "That offer was made on the basis that you had advised us that you had cancelled the job, I have reviewed all correspondence from you & the offer is withdrawn as at no point have you communicated in writing as is in our terms”
He never said that the offer to withdraw the invoice was based on cancelling the job in writing during the telephone call, but it is going to be his word against mine !!!!!
So that was the question. Here's the response -
John
Why would you pay for my time just to be right?
Stop. Look at the situation. You have a relationship breakdown with the person doing the work.
Is the work already done of any use to you? Is it fair that the person who did the work gets paid for the time? Do you want to continue to work with this person in the future?
My suggestion, rather than legal advice is this:
It is a very small amount of money in the grand scheme of things, so don’t make it about the money. If that brings up a reaction for you, be interested in your reaction and what you can learn from it. It’s still not about the money.
You may chose to very respectfully and politely refer him to your telephone conversation (by time and date) and advise that you are confirming in writing the discussion on the phone that you do not require his services any further, and thank him for having agreed to cancel the invoice at that time.
Consider how you are feeling when you write that email and do it from a position of complete acceptance of the person you are writing to rather than a position of being right or being in dispute.
My legal advice is to pay the money and get on with life. Continuing this dispute is only going to hold you up from moving forward and cost you more time, money and energy than the invoice is worth.
There is no predictable result in court on the basis of the information that you have given me. Because they have done some work and issued an invoice they have a greater chance of success than you do if they took the matter to debt recovery or court. Your word against theirs is not a good position to be in when heading to court.
So tell me, what do you think of this last piece of advice?
29 September 2009
24 September 2009
Bad service and demands for payment - Part 3
Now after the more general questions that John sent me and before I had provided him with some answers, he sent me a more specific question...
I have a contract that a supplier is trying to enforce payment on. We signed a contract but never paid the required 50% deposit. The contract letter p2 states:
“trading – 50% deposit, balance on delivery”
And below signature line it states.. “By signing this & paying deposit you are accepting of the above terms & conditions which can only be varied by a notice in writing & signed by both parties”
We thought this meant that we needed to sign AND pay the deposit, and then we would be bound by the terms and conditions of this contract. Since we never paid the deposit, we are not bound by the terms and conditions of this contract. Is that correct?
The short and simple response was this -
Contracts are essentially made when there is:
offer, acceptance, consideration
They offered to do work, you accepted in part by signing the quote, even if you didn’t pay the deposit, if they acted in reliance upon your signed acceptance, even if you didn’t pay the deposit, and did work, then you probably do owe them money.
The real question is, have they done any work for you? If they have, you owe them money, maybe not all they have asked for, but a reasonable sum for the work that they have done. I suggest you have a frank and honest conversation with them as to why you did not pay the deposit, and why you don’t want to pay the balance now, and negotiate a result you can both live with.
If they haven’t yet done any work for you, they can’t seek payment.
What kind of difference would this kind of advice make for you in your business?
I have a contract that a supplier is trying to enforce payment on. We signed a contract but never paid the required 50% deposit. The contract letter p2 states:
“trading – 50% deposit, balance on delivery”
And below signature line it states.. “By signing this & paying deposit you are accepting of the above terms & conditions which can only be varied by a notice in writing & signed by both parties”
We thought this meant that we needed to sign AND pay the deposit, and then we would be bound by the terms and conditions of this contract. Since we never paid the deposit, we are not bound by the terms and conditions of this contract. Is that correct?
The short and simple response was this -
Contracts are essentially made when there is:
offer, acceptance, consideration
They offered to do work, you accepted in part by signing the quote, even if you didn’t pay the deposit, if they acted in reliance upon your signed acceptance, even if you didn’t pay the deposit, and did work, then you probably do owe them money.
The real question is, have they done any work for you? If they have, you owe them money, maybe not all they have asked for, but a reasonable sum for the work that they have done. I suggest you have a frank and honest conversation with them as to why you did not pay the deposit, and why you don’t want to pay the balance now, and negotiate a result you can both live with.
If they haven’t yet done any work for you, they can’t seek payment.
What kind of difference would this kind of advice make for you in your business?
22 September 2009
Bad service and demands for payment - Part 2
Following on from my last post, John's second question was focussed more on how to negotiate a different result than what to do with an invoice for work he wasn't happy with...
How do I negotiate with a supplier or contractor when they are unwilling to correct the service, but still demanding payment?
If the supply was made to you as an individual consumer (rather than a business consumer) either do, or threaten to, make a complaint to Consumer Affairs. In most Australian states you can make a complaint to consumer affairs that costs you nothing by simply filling in an online form and waiting. And waiting. They are pretty busy so it can take a couple of months to get to your complaint.
You can also lodge a Fair Trading complaint in the appropriate administrative tribunal complaining that they haven’t done the work properly. Under Fair Trading laws contractors and suppliers and other businesses are required to provide services in a proper workmanlike manner. There are also a number of other avenues for complaint, for example if what is supplied does not fit the purpose that you wanted to put it to. So if you order, say, a custom built trailer from someone for the purpose of carting a market stall around, which is of a particular shape and size that you have told the builder about, and it doesn’t fit on the trailer or the trailer can’t take the weight, then its not fit for the purpose they knew you wanted it for and you aren’t obliged to either accept delivery of it or pay for it.
If it is a business to business transaction and they won’t negotiate, then pay what you think is a fair price for the work done, keep an amount relevant to the cost of repairing the work done and then put it all in writing. Eg:
Invoice amount: $4960
Alternate materials used so value reduced by $789
Anticipated cost of repair: $1200 (get a quote if you can)
Prepared to pay $4960 - $789 - $1200 = $2,971
Explain in writing why you are prepared to pay what you are paying and why you are not prepared to pay any more. Give them a reasonable amount of time to arrange (7 days) or complete (14 days) repairs and tell them if you don’t hear otherwise you’ll get the repairs done by someone else and pay them the quoted price for repair. Do get a short statement of the work done from anyone you get to do repairs! Better if they are properly qualified to do that work too. Not good if its your handyman mate, neighbour or uncle!
Once you have paid what you believe to be fair and provided an opportunity for them to correct their work, it puts them in a very difficult position in regard to demanding payment of the balance of their invoice. The important thing for you is to keep copies of all your communications with them (notes of telephone calls), take photos of the problem before it is fixed and after it is fixed, be clear about what the expected result was etc.
If you can collate that information into a timeline of events with supporting documentation, then you are prepared to argue the point in a tribunal or a court. You will also be confident in your position and know what you are doing. If you can’t be that organized (or bothered), pay them and move on! It really isn’t worth being stuck in a dispute, it simply sucks your time and energy and holds you up from moving forward.
Complete it and move on.
Have you every been stuck in a dispute that cost more of your time and energy than it was worth?
How do I negotiate with a supplier or contractor when they are unwilling to correct the service, but still demanding payment?
If the supply was made to you as an individual consumer (rather than a business consumer) either do, or threaten to, make a complaint to Consumer Affairs. In most Australian states you can make a complaint to consumer affairs that costs you nothing by simply filling in an online form and waiting. And waiting. They are pretty busy so it can take a couple of months to get to your complaint.
You can also lodge a Fair Trading complaint in the appropriate administrative tribunal complaining that they haven’t done the work properly. Under Fair Trading laws contractors and suppliers and other businesses are required to provide services in a proper workmanlike manner. There are also a number of other avenues for complaint, for example if what is supplied does not fit the purpose that you wanted to put it to. So if you order, say, a custom built trailer from someone for the purpose of carting a market stall around, which is of a particular shape and size that you have told the builder about, and it doesn’t fit on the trailer or the trailer can’t take the weight, then its not fit for the purpose they knew you wanted it for and you aren’t obliged to either accept delivery of it or pay for it.
If it is a business to business transaction and they won’t negotiate, then pay what you think is a fair price for the work done, keep an amount relevant to the cost of repairing the work done and then put it all in writing. Eg:
Invoice amount: $4960
Alternate materials used so value reduced by $789
Anticipated cost of repair: $1200 (get a quote if you can)
Prepared to pay $4960 - $789 - $1200 = $2,971
Explain in writing why you are prepared to pay what you are paying and why you are not prepared to pay any more. Give them a reasonable amount of time to arrange (7 days) or complete (14 days) repairs and tell them if you don’t hear otherwise you’ll get the repairs done by someone else and pay them the quoted price for repair. Do get a short statement of the work done from anyone you get to do repairs! Better if they are properly qualified to do that work too. Not good if its your handyman mate, neighbour or uncle!
Once you have paid what you believe to be fair and provided an opportunity for them to correct their work, it puts them in a very difficult position in regard to demanding payment of the balance of their invoice. The important thing for you is to keep copies of all your communications with them (notes of telephone calls), take photos of the problem before it is fixed and after it is fixed, be clear about what the expected result was etc.
If you can collate that information into a timeline of events with supporting documentation, then you are prepared to argue the point in a tribunal or a court. You will also be confident in your position and know what you are doing. If you can’t be that organized (or bothered), pay them and move on! It really isn’t worth being stuck in a dispute, it simply sucks your time and energy and holds you up from moving forward.
Complete it and move on.
Have you every been stuck in a dispute that cost more of your time and energy than it was worth?
17 September 2009
Bad service and demands for payment - Part 1
There are actually three or four parts to this topic all revolving around great questions from John, thanks John! I'll post the questions as he put them to me and the responses that I made to each question over the next couple of weeks so that you can get a feel of the different kind of responses that are available depending upon the way you ask the question. Asking better questions will always give you better answers! Although I have answered this question in an Australia centric fashion, similar priniciples apply wherever you are in the World.
How do I deal with contractors or suppliers who have given me terrible service then demand payment via their invoice?
Firstly, do you have anything in writing? Often you will receive the terms and conditions of supply on the back of a quote from a supplier. Sometimes they don’t have any at all. Contractors frequently don’t have terms of service. If you have received something in writing, have a look at that first and work out when you received as compared to when the work was done. If you received it after the work was done, it doesn’t necessarily apply. If before, it probably does.
Secondly, if you are an individual you are protected by consumer legislation relevant to your legal jurisdiction. There is an office of Fair Trading or Consumer Affairs in each state and territory of Australia and they all have websites, some are more useful than others. There is Fair Trading legislation that applies to the supply of goods and services to individual consumers. You can find a copy of the Australian legislation through http://www.austlii.edu.au/* by going to the tabs on the left hand side of that page, picking your state, then looking for “consolidated acts” for that jurisdiction, “F” and find “Fair Trading Act” in the list. Fair Trading Acts are full of fascinating rights and entitlements for consumers!
Did you know that a contractor or supplier is required by law to complete their work in a “proper, workmanlike manner”? If you have contractors who are demanding payment and have failed to provide an adequate service you can let them know that you are prepared to make a complaint to Consumer Affairs if they don’t have a chat with you to work out something more reasonable.
In Victoria, New South Wales, Queensland and ACT the governments have created Civil and Administrative Tribunals which deal with these kinds of complaints. Again, they all have websites, some better than others. There similar tribunals in other states, just look for them through the Consumer Affairs websites. These tribunals are less formal than courts and, whether they admit it or not, biased to the consumer. Complaints are usually pretty cheap (less than $100 for a complaint with a value of up to $10,000) to lodge with the tribunal; can be paid by credit card and forms are usually available to download from the website and can be submitted online, post or fax.
You do need to be prepared if you are going to lodge a formal complaint with a tribunal. Collect everything you have in writing and any notes you have of telephone conversations. The law is not about right or wrong, its about who can put forward the most believable “proof”. You also can’t leave anything out. When you put forward the “facts” you need to put forward all of the facts, not just the ones you like or that make you look good. Also, don’t make things up! Tribunal Members, Magistrates, Judges are not fools and they are used to having people present cases to them. When they prepare a decision they will tell you whether or not they found your story credible!
If you are planning to make a complaint, be organised. Collate the information about what was requested, what was expected, the exchange of quotes and information, telephone calls etc into a timeline of events with supporting documentation, then you are prepared to argue the point in a tribunal or a court. You will also be confident in your position and know what you are doing. If being that organized sounds like too much trouble, then pay the disputed invoice and move on! It’s not worth letting a dispute suck your time and energy. Take it as a lesson well learnt and money you don’t need to spend again to learn the same lessons.
*www.austlii.edu.au has links to international Legal Information Institutes around the World at the bottom of their homepage.
How do I deal with contractors or suppliers who have given me terrible service then demand payment via their invoice?
Firstly, do you have anything in writing? Often you will receive the terms and conditions of supply on the back of a quote from a supplier. Sometimes they don’t have any at all. Contractors frequently don’t have terms of service. If you have received something in writing, have a look at that first and work out when you received as compared to when the work was done. If you received it after the work was done, it doesn’t necessarily apply. If before, it probably does.
Secondly, if you are an individual you are protected by consumer legislation relevant to your legal jurisdiction. There is an office of Fair Trading or Consumer Affairs in each state and territory of Australia and they all have websites, some are more useful than others. There is Fair Trading legislation that applies to the supply of goods and services to individual consumers. You can find a copy of the Australian legislation through http://www.austlii.edu.au/* by going to the tabs on the left hand side of that page, picking your state, then looking for “consolidated acts” for that jurisdiction, “F” and find “Fair Trading Act” in the list. Fair Trading Acts are full of fascinating rights and entitlements for consumers!
Did you know that a contractor or supplier is required by law to complete their work in a “proper, workmanlike manner”? If you have contractors who are demanding payment and have failed to provide an adequate service you can let them know that you are prepared to make a complaint to Consumer Affairs if they don’t have a chat with you to work out something more reasonable.
In Victoria, New South Wales, Queensland and ACT the governments have created Civil and Administrative Tribunals which deal with these kinds of complaints. Again, they all have websites, some better than others. There similar tribunals in other states, just look for them through the Consumer Affairs websites. These tribunals are less formal than courts and, whether they admit it or not, biased to the consumer. Complaints are usually pretty cheap (less than $100 for a complaint with a value of up to $10,000) to lodge with the tribunal; can be paid by credit card and forms are usually available to download from the website and can be submitted online, post or fax.
You do need to be prepared if you are going to lodge a formal complaint with a tribunal. Collect everything you have in writing and any notes you have of telephone conversations. The law is not about right or wrong, its about who can put forward the most believable “proof”. You also can’t leave anything out. When you put forward the “facts” you need to put forward all of the facts, not just the ones you like or that make you look good. Also, don’t make things up! Tribunal Members, Magistrates, Judges are not fools and they are used to having people present cases to them. When they prepare a decision they will tell you whether or not they found your story credible!
If you are planning to make a complaint, be organised. Collate the information about what was requested, what was expected, the exchange of quotes and information, telephone calls etc into a timeline of events with supporting documentation, then you are prepared to argue the point in a tribunal or a court. You will also be confident in your position and know what you are doing. If being that organized sounds like too much trouble, then pay the disputed invoice and move on! It’s not worth letting a dispute suck your time and energy. Take it as a lesson well learnt and money you don’t need to spend again to learn the same lessons.
What have you learnt about consumer law lately?
*www.austlii.edu.au has links to international Legal Information Institutes around the World at the bottom of their homepage.
15 September 2009
Scared to sack someone? Need to sack someone?
When you have a small business, in fact any size business, you can't afford to keep people on the pay roll just because you employed them in the first place.
Let's face it, we all make mistakes. Sometimes someone sounds ideal for the role when interviewing them and once they are actually doing the day to day work, we realise that either they are simply not up to it, or it isn't the right fit.
The key is to bite the bullet and take action as soon as you realise that they are not suitable for the role. This is easier said than done for most people. I have worked in an organisation who kept on a completely incompetent employee for more than three years when they never should have been employeed for more than a month. The excuses the boss made for not sacking the individual were many and varied including:
- they're still getting used to the role
- I've cautioned them and they seem to be behaving better this week
- they weren't feeling well today
- I was going to do it today but they were away sick
- they've just had a death in the family
- I haven't had time
As Donald Trump says, its not personal, its business. Consider that an incompetent employee makes more work for other staff, disrupts morale within the workplace, has the potential to make mistakes which cause significant financial loss to the company and is not receiving any favours from you if they think they are fulfilling a role competently when in actual fact they are not.
There are ways and means to dismiss staff.
Firstly, be clear when employing staff as to the expectations of their role. You can't dismiss someone for failing to do their job when no one is clear on what their job actually is!
Secondly, if you have someone on a three or six month trial period, meet with them regularly and review both their experience and your expectations. Don't leave it until the end of the trial period to conduct a review.
Thirdly, if they are not working out and you don't intend to keep them past the end of the trial period, let them know. You might think that it is better to keep them in the business for the whole of that period so as to avoid having to find someone new until later, but neither your business nor the employee are likely to benefit from prolonging an unworkable situation.
If you just never got around to telling someone that you did not intend to keep them on during their trial period, then look at providing training and mentoring as an avenue to assist them in becoming capable of fulfilling the role. Review regularly and reasonably. Keep a record of progress. Highlight fundamental requirements of the role that are not being met and provide the employee with an opportunity to meet those requirements.
The main point is that if you don't tell an employee where they are not meeting expectations and provide them with a reasonable opportunity to shape up, you can't turn around and ask them to ship out and expect no repercussions!
Have you got a story to share?
10 September 2009
Losing your job and calling in the lawyers
I was recently asked to provide some advice to a friend of a friend who had just lost their job.
The thing was that they didn’t just lose their job. They spent 11 years working 60 to 80hrs per week to grow a business from $150,000 per year to $2,000,000 per year on the promise (not in writing) of a business partnership. A company was set up in 2008 to take over the business and provide the partners with shares with the transfer coming into effect in July 2009. Coincidently, after 11 years of service under a business management and marketing contract, my friend of a friend had their services terminated in April 2009. Unlikely to be a coincidence. This is the query my friend sent through to me:
Do you know of any quality Industrial Workplace type lawyers who I can talk to simply to get some honest answers... I have spoken to a number of them and they are happy to take on the case but in reality they would all love to take on the case... Ideally if I could find an honest lawyer, pardon the pun then I would be a lot happier... I would be happy to give a lawyer 10% of any money they recover for me as a payment, rather than simply throwing good money after bad on a wing and a prayer.And here is the response I provided:
You will find that most lawyers are honest; they simply don’t have an adequate concept of explaining the way the system works to their clients.
Unfortunately I don’t know anyone over there to recommend. You would be best to get a local lawyer. In terms of finding a lawyer to help you, it sounds like you want someone in litigation with an understanding of contracts and constructive trust arguments more than a workplace lawyer.
Your offer of 10% of recovery is actually not a proposal that lawyers are permitted to accept under champerty rules (its an ethical compliance thing), although I know there are some provisions which allow firms to enter into ‘no win, no fee’ type arrangements.
Some suggestions:
- Do not let your legal proceedings become the focus of your life. If you do, you will be disappointed.
- Focus on the outcome you want considering what might fall in between your worst case scenario (you lose, pay your legal costs and their legal costs) and your best case scenario (you win, they pay ½ your costs). Expecting to get only your best case scenario is not realistic.
- Concentrate on rebuilding your future more than your legal case.
- When finding a lawyer, ask them to give you examples of similar work they have done and ask for a testimonial from the people they have done that work for in the past.
- You should approach Legal Aid. They fund commercial cases in very limited circumstances and may also know of other organizations which may assist you with legal fees. They might also be able to recommend a lawyer for you.
- Be clear on what your fees are likely to be. Keep asking questions until you are clear. Then double the figure that they have given you as an estimate and keep in mind that even if you win, you can only recover about ½ of your legal costs from the loser. You have to win to recover any costs at all.
- If your first legal opinion is that you have no case, ask them why and what you would need to be able to demonstrate in order to have a case. Do not shop around until you find someone who says you do have a case if more than one lawyer says you don’t.
- Be prepared and clear each time you deal with your lawyers. Its saves them time and you money.
- For the 10 page history that you have prepared, collect as much supporting evidence as you can, especially letters, emails and anything that was in writing at the time that your original agreement was made. Relying on oral testimony alone is a risky way of running a case.
A recent movie which highlights the risks of becoming obsessed with court proceedings is Flash of Genius
08 September 2009
Argh, I'm being sued again!
The question I actually received from an Australian lady was this -
How do you stop a person on centrelink benefits who can lodge as many appeals against you as they like without financial cost to them) from calling you back to court?
It is horribly frustrating to be dragged in to court repeatedly when you have nothing to do with the actual action and its already been resolved. It's not just frustrating for you either, its also frustrating for the courts because it delays worthy cases and consumes resources. I wrote some commentary on the Queensland (Australia) court rules on this a couple of years ago and have actually made applications like this against a couple of people on behalf of clients.
Most court and tribunal systems have what is called “vexatious litigant” rules. You can apply to the court to have a person declared a vexatious litigant in circumstances where they have made numerous claims around the same circumstances. One person I had to obtain an order against had started proceedings in two courts and two different tribunals with claims ranging from breach of contract to discrimination, unfair dismissal from employment and breach of human rights.
To make an application to have someone declared a vexatious litigant you need to provide the Court with details of past actions and anything else they have done in other courts against you, and the cost to you both in terms of time and money.
If your application is successful, the person you get the order against will need to apply to the Court to get the Court’s permission before they can commence any further actions against you.
The only limitation is that such an order applies only in the Court that you obtain it, so if your vexatious litigant keeps changing courts you will need to make more than one application. Once you do have a successful application, you can use that as part of your evidence to support applications in other courts.
In my experience, obtaining one of these orders in one court has been sufficient to stop the litigant from continuing their claims in all courts. What is your experience?
How do you stop a person on centrelink benefits who can lodge as many appeals against you as they like without financial cost to them) from calling you back to court?
It is horribly frustrating to be dragged in to court repeatedly when you have nothing to do with the actual action and its already been resolved. It's not just frustrating for you either, its also frustrating for the courts because it delays worthy cases and consumes resources. I wrote some commentary on the Queensland (Australia) court rules on this a couple of years ago and have actually made applications like this against a couple of people on behalf of clients.
Most court and tribunal systems have what is called “vexatious litigant” rules. You can apply to the court to have a person declared a vexatious litigant in circumstances where they have made numerous claims around the same circumstances. One person I had to obtain an order against had started proceedings in two courts and two different tribunals with claims ranging from breach of contract to discrimination, unfair dismissal from employment and breach of human rights.
To make an application to have someone declared a vexatious litigant you need to provide the Court with details of past actions and anything else they have done in other courts against you, and the cost to you both in terms of time and money.
Vexatious litigants are frustrating! For you and the courts.
If your application is successful, the person you get the order against will need to apply to the Court to get the Court’s permission before they can commence any further actions against you.
The only limitation is that such an order applies only in the Court that you obtain it, so if your vexatious litigant keeps changing courts you will need to make more than one application. Once you do have a successful application, you can use that as part of your evidence to support applications in other courts.
In my experience, obtaining one of these orders in one court has been sufficient to stop the litigant from continuing their claims in all courts. What is your experience?
03 September 2009
Is a company as trustee of the trust the most “protected” structure?
Great question, and thank you to the lady who asked it. It generally depends upon the nature of the protection that you are seeking to obtain. Different structures have different benefits.
When you set up a private company you create a legal entity between you and the rest of the world. You will most likely be a shareholder and director in that company and provided that you comply with your obligations as a director, will not be liable as an individual for the activities of the company. If the company is simply going to act as trustee of a trust, then it should not be used as a trading entity and will then have minimal reporting requirements each year. Essentially a statement to say that there has been no money through the company, its not trading and therefore is solvent and able to continue to exist.
As trustee, the company becomes the public face of the trust and the fact of the existence of the trust does not need to be publicly known. A trust is one of the most private structures that you can set up. Banks and finance companies will require disclosure of the full legal structure you are using and will know the relationships, but the public won’t. A great example is a corporate trustee purchasing a property on behalf of a trust. The registered title for the property will show that the company is the owner. Anyone suing the company won’t get very far because there is no money or property in the company, it’s in the trust.
When property is held in a trust it is hard to get at. Trusts can be set up to provide the beneficiaries (the people ultimately entitled to the benefit of the trust property) with income from or distribution of the trust assets either at the discretion of the trustee or upon fixed events. Anyone wanting to get something from a beneficiary cannot access the trust property as long as it remains in the trust.
Please note that the Courts may have powers in separations and family breakups which may enable the Court to make orders accessing trust property regardless of whether or not it has been distributed. There are also circumstances where the Courts can declare that a trust exists or that in the circumstances an expectation of distribution from the trust has occurred, enabling access to the trust property.
If you are prepared to spend the money there are apparently ways to make it next to impossible for others to get at your assets. It does depend on the expertise of your advisors and how accessible you want things to be. Also consider what would happen to it all if you died tomorrow and how you would be able to pass it on to a charity or loved one.
Is there more you'd like to know, or a personal experience you'd like to share?
When you set up a private company you create a legal entity between you and the rest of the world. You will most likely be a shareholder and director in that company and provided that you comply with your obligations as a director, will not be liable as an individual for the activities of the company. If the company is simply going to act as trustee of a trust, then it should not be used as a trading entity and will then have minimal reporting requirements each year. Essentially a statement to say that there has been no money through the company, its not trading and therefore is solvent and able to continue to exist.
As trustee, the company becomes the public face of the trust and the fact of the existence of the trust does not need to be publicly known. A trust is one of the most private structures that you can set up. Banks and finance companies will require disclosure of the full legal structure you are using and will know the relationships, but the public won’t. A great example is a corporate trustee purchasing a property on behalf of a trust. The registered title for the property will show that the company is the owner. Anyone suing the company won’t get very far because there is no money or property in the company, it’s in the trust.
Different structures have different benefits
When property is held in a trust it is hard to get at. Trusts can be set up to provide the beneficiaries (the people ultimately entitled to the benefit of the trust property) with income from or distribution of the trust assets either at the discretion of the trustee or upon fixed events. Anyone wanting to get something from a beneficiary cannot access the trust property as long as it remains in the trust.
Please note that the Courts may have powers in separations and family breakups which may enable the Court to make orders accessing trust property regardless of whether or not it has been distributed. There are also circumstances where the Courts can declare that a trust exists or that in the circumstances an expectation of distribution from the trust has occurred, enabling access to the trust property.
If you are prepared to spend the money there are apparently ways to make it next to impossible for others to get at your assets. It does depend on the expertise of your advisors and how accessible you want things to be. Also consider what would happen to it all if you died tomorrow and how you would be able to pass it on to a charity or loved one.
Is there more you'd like to know, or a personal experience you'd like to share?
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