So... I'm off to Dymphna Boholt's day tomorrow

The trustee is the legal owner. In the case of the trading trustee this trades and takes some risk. The piggy bank trustee doesn't trade but holds money which it lends out to related entities - to become a creditor.

It is like giving all you money to your sister. She lends it back to you so you can open a shop. If the shop fails you still owe you money to your sister as well as others. If you had given her security she would take priority over other credits - subject to various laws.

 

This used to be run by a man who keeps changing the spelling of his name.

 

Whose that? I see someone called "James Dawson Property" with copyright at the bottom suggesting Knowledge Source

 

Okay, sot that's how the piggy bank protects your assets. That's how banks always get their money paid first when people go bankrupt.
What about the trading trustee? Is it set up so that it rents the property on behalf of the corporate trustee and bears all the risk if the tenant sues?

 

The trading trustee is the trust. If the tenant sues all the trust assets are at risk. The way to minimise this is to not have too much in one trust.
Legal Tip 61: Multiple Trusts as an Asset Protection Strategy?

 

I understand multiple trusts are better at asset protection. I don't understand the need for a separate trading trustee like in the diagram, as it appears to be an additional company to the one acting as a trustee for each property trust.

If each property had a corporate trustee, couldn't each corporate trustee be trading? What is the benefit of outsourcing this, if in the end, the asset is still at risk?

 

Your right. I had another look and that trading trustee seems to be a business operator.

 

Could you have it structured that way? Where the trading trustee and trust is taking all the risk, but it doesn't own anything?

 

Probably John Giann/Jon Giannopoulos

 

Definitely.

 

Ok. So if this trading trust can be a landlord on behalf of the owner, and a tenant sues, would the trading trust be the only liable party, or is the owner the property always liable for what happens in the tenancy of his/her property?

 

Oh, in that sense then no it won't provide much protection.

Think of those slip and fall cases in woolworths - the customer will sue both the company owning the building and the company leasing it.

 

Ah ok. Then there's not much point in having a separate trading trust like in the diagram, is there? One could just let the corporate trustee be owner and landlord of its trust's property. Or is there something I'm missing?

 

The trading trust would be operating a business such as a mortgage broking firm. No real point in leasing a property to another entity to have that entity then subleaase it - it would provide some benefits in asset protection I guess. If there was a contract dispute between lessor and lessee then the owner would not be party to this dispute. But for a negligence claim not much protection.