A client has advised they were ‘advised’, on an expensive course, to deposit their wage into a bank account of the trustee of a trust rather than into their own personal bank account..
This is for asset protection supposedly.
The idea is that the money never touches your account so it cannot fall into the hands of creditors.
In situations such as this, the trustee would be holding the money for you as bare trustee. There is no asset protection if you were to go bankrupt, die or go through a family law property settlement as it is still your money.
Furthermore, you have additional issues to consider such as what if the trustee
- Goes bankrupt
- Loses capacity
- Gets divorced
You would probably have worse asset protection issues.
If you did end up bankrupt the money could easily be clawed back.
Tip: Don’t do this without proper legal advice tailored to your situation.