How Unsecured Business & Trust Assets are currently at Risk from Liquidators
Legislation Changes That Allows Liquidators To Seize Your Trust Assets (2024)
Recent changes in legislation negates the Asset Protect traditionally associated with your Business or Family Trust. In essence if you’re using a trust now to protect your business assets and you haven’t updated your structure, those assets are more than likely no longer protected.
Key Points,
- What Are The Legislation changes affecting Trust,
- Why Traditional Trusts no longer Protect Businesses Assets,
- How To Protect Your Trust Asset For $6,
Legislation Changes affecting Trusts
Why Your Existing to Trust Structure No Longer Works
For the past 30 to 40 years businesses have been established using a trust or holding company to protect the assets of their business. Unfortunately, since the Introduction of the Personal Property Securities Act that is no longer the case.
Introduction of the Personal Property Securities Act
In the last few years, the Australian Government introduced a piece of legislation called the Personal Property Securities Act. Along with the Act also came its registry, which is basically a government online message board / Electronic Register which is called the Personal Property Securities Register or PPSR.
Title or Ownership in Goods Or Equipment No Longer Exists
As a direct consequence of the introduction of the PPSA, title or ownership no longer exists without first being registered on the PPSR. This is right across the board for literally affects everything. The only asset class which is exempt is Bricks and Mortar. Therefore if you want to retain ownership of your Trust Assets they must be registered on the PPSR.
Trust Failures
Written Agreement
For a Trust to maintain ownership of their equipment, or for any PPSA Registration to be valid and legally binding, the entity registering the security interest or ownership must be able to demonstrate two key points.
- That there is a written agreement between the two entities involved.
- That any agreement between the two parties is signed.
Legislation Requirements
That Agreement must also include the appropriate PPSA legislation which in most cases is a combination of several different clauses all working together. It’s the combination of these clauses incorporated into the written agreement between your Trust and your Trading entity that provides the authority for a PPSA Registration and is what determines if your PPSA Registration is legally valid.
Asset Register
This list or asset register is how liquidators identify what is covered by a particular PPSA Registration and what isn’t.
Protecting Trust Assets
Chattel Lease
The Great New is that truly protecting your trust assets has never been easier. A simple Chattel Lease which includes the relevant legislation and Asset Register is only a click away.
A Chattel Lease forms the formal agreement between your Trust and your Trading Entity. It incorporates the appropriate legislation giving the Trust the legal authority to register the agreement on the PPSR and also include the list of goods and equipment the Trust wishes to identify as belonging to the Trust.
PPSA Registration
Once you have a Chattel Lease completed and signed by both parties all that is required is to have that agreement registered on the PPSR within 15 days of signing the agreement.
The 15-day time frame is imperative to ensuring that any Trust Agreement being registered remains valid. Any agreement being registered outside of the 15-day time limit will be deemed to be invalid for the first 6 months of the registration. At 6 months and 1 day, the Chattel Lease PPSA Registration is deemed to be valid and will protect your Trusts assets.
Registration Costs
And the best part is that it only costs $6 to register a Chattel Lease Agreement for a (7) seven years. That is less than ($1) one dollar per year.
The added bonus is that as your Trust Assets change throughout the 7 years of your PPSA Registration, all that is required is that you simply update the asset register attached to your Chattel Lease registration. We normally advise our clients to do this every 6 months or so.