Legal Tip 131: Legal Tip: Estate Planning Implications of Bucket Companies

Some Estate Planning Implications of Bucket Companies

A bucket company may end up holding large sums of cash and should, therefore, be considered in your asset protection plan and for estate planning purposes as well. What could happen if the shareholder dies while the company has cash?

Shares owned by the deceased pass via their will or, if there is no will, but the intestacy laws. So make sure these shares end up in the right hands. If the shares do end up in an individual’s hands what are the asset protection risks and tax consequences.

If the shares are owned by the trustee of a trust the shares will not pass via the will. In these cases, the control of the trust post death needs to be considered.

 

Or of greater concern is the bucket company lends / invests the cash to Company "Y" or Trust "B" and control and recovery becomes a concern. Spouses in matrimonial dispute or family group breakdown seek to enquire where their asset share is...PI claim for the adviser ? I have seen two large cases in recent times for deprived shareholders and given forensic advice

 

Company loans are also very important to consider yet most would not.

I had a case where the mum died and the executor of her estate sued the trust she controlled for unpaid present entitlements. Costly mess.

 

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Legal Tip 196: Strategy: Personally Owning the Shares of a Bucket Company