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Legal Tip 2: Asset Protection

Discussion in 'Legal Issues' started by Terry_w, 20th Jun, 2015.

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,033
    Location:
    Sydney
    When doing any transaction, especially related party transactions, consider the claw back provisions under the Bankruptcy Act, the 2 main ones being:

    120. Undervalued transactions see
    http://www.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s120.html

    121. Transfers to defeat creditors
    see http://www.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121.html

    Most people forget about the state legislation as well:
    e.g. Conveyancing Act 1919 (NSW)
    37A. Voluntary alienation to defraud creditors voidable
    see http://www.austlii.edu.au/au/legis/nsw/consol_act/ca1919141/s37a.html

    Each State has its own legislation similar to the s37A

    What the above sections mean is that a transaction entered into with the intent of defeating creditors or putting property out of reach of the trustee in bankruptcy (if you were to go bankrupt) could be attacked. This can even apply to future creditors.

    So take care in how you do things, especially related party transfers such as changing title on property.

    I should post one legal tip per day - only on the areas of law that interest me.
     
    nucence likes this.