Signing surety

Of course none of us want to sign surety for someone or something else's debt, but there are times when it is unavoidable.

Typically, you would have to sign surety for -

Your company's overdraft facility

Your company's leases and instalment sale agreements

Your trust's property company's mortgage bond agreements

All of the above are unavoidable and are not too onorous. After all, you've protected your growth assets against your possible bankruptcy by holding them in a trust so if the surety is called and you go bankrupt as a result, well, at least the trust assets are safe (except, of course, the asset that secured the debt).

Your primary residence will be at risk, but that was a decision you took when you decided not to hold it in the trust.

But you must NEVER, as a trustee, sign surety for anyone outside of the trust. Not for you, not for your wife, not for your kids. Why not? Because if they go bankrupt, the trust's assets will be forfeit to their creditors and that defeats the whole asset protection purpose of the trust.

Here's a simple diagram that illustrates the point -


Should you wish to make an appointment, please feel free to visit Derek's diary and book a time that suits you.

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