Insurance Proceeds Trust:

Insurance is a necessary investment in many cases throughout our lives. It offers protection, at a relatively small cost, for unexpected and significant losses that may occur in your life. Most insurers will protect against unforeseeable and unpreventable losses such as natural disasters, accidents and medical emergencies. However, it is also important to ensure against everyday risks by obtaining income protection, health insurance, motor vehicle insurance and travel insurance. Quite often in life an unexpected turn of events may lead to a significant insurance pay out.  It is advisable and good business acumen to seek legal and financial advice should you receive a large insurance pay out.  Sometimes, if you do not have liquidity or capital needs immediately, it is wise to invest the money or save it for future use. Establishing a trust from your insurance proceeds is a course of action which may be hugely beneficial. Thorough and detailed advice from a qualified and experienced Asset Protection and Trusts Lawyer can be invaluable in structuring and drafting such a trust deed.

Of course, many of us are aware of the major benefits of using a trust structure to manage capital and income. These benefits include to minimise tax, to access a high level of investment and distribution and to protect against external risks such as bankruptcy risks. If you use a discretionary trust structure then no beneficiary has a fixed entitlement to the trust assets and you have the power to determine the individuals or organisations that are beneficially entitled to the income of the trust. Thorough and detailed legal advice in the complex area of trusts law may be of great value in determining the appropriate trust structure that is suitable for your needs.

There are many different types of trusts with unique features and advantages. You may prefer the flexibility and tax advantages of a discretionary trust; require the fixed interest and entitlement of a unit trust or wish to operate your own family business through a trading trust.  The trust provides a unique legal relationship between a trustee, beneficiary and involves ‘trust property’. There are also protections for the beneficiary as although the trustee has legal title, the beneficiary has an equitable title. The trustee has an obligation to act in good faith and comply with fiduciary duties. The obligations of a trustee are equitable and are enforceable only in a court having equitable jurisdiction. Even though the trustee’s obligations are personal obligations, they are also annexed to the trust property, so that the beneficiary has rights of a proprietary nature constituting an equitable estate in the property, which are enforceable against any subsequent holders of the property other than a purchaser for value of the legal interest without notice (or an innocent third party that later acquires the trust property with no knowledge of the equitable interest by the trust).

A trust is a vehicle or device that may be very useful for wealth generation, investment, tax minimisation and distribution of income and capital. A qualified Asset Protection and Trusts Lawyer may have regard to your circumstances and advise you of the suitable trust structure that is compatible with your needs.

If you need further legal advice on your matter, you may book an appointment with us by telephone on (02) 9233 4048 or by email to info@navado.com.au. 

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.