Protecting your assets from creditors

Written By: Tiang Chuan on August 15, 2008 No Comment

Do you know you can lose almost all of your assets to your creditors, including your insurance policies? Today’s Straits Times report of the seizure of fugitive ex-Citiraya boss’s assets highlighted of one of the risks consumers, particularly business owners face.

One of the ways to protect assets from creditor is to set up a trust. A statutary trust created under Section 73 of the Conveyancing and Law of Property Act (CLPA) when someones buy a policy on his/her own life for the benefit of the spouse or child. This method was commonly used as a means of avoiding Estate Duty and creditors. the good news is that Estate Duty has be removed from Singapore as announced in Parliarment in Feburary this year. The bad news is, potential creditors are still around.

Using CLPA is not without its problems. Potential problems include issues arising with divorce, taking policy loans or surrendering policy for beneficiaries who are minors. One of the biggest push factors of using an irrevocable trust (CLPA is a form of irrevocable trust) is that the settlor (the one who sets up the trust) loses all control of his assets as they are for the benefit of someone else (the beneficiary) and cannot make changes without the approval of the beneficiary.

A new platform which provides the ability to protect the settlor’s assets from creditors yet provide him/her with total control of the assets is now available in Singapore. There are other benefits of using such platforms which I will share in the future. Meanwhile, we are doing our due diligence and will provide more info soon. So, watch out for this space!

Potential Probate Issues With Foreign Assets

Abolishment of Estate Duty

Tags: Estate