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Scottish Trust Deed Forum
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Topic starter
06/04/2012 10:37 am
The subject has come up several times on the forum, so I thought I'd give a rough guide to what they are.
In very general terms, it is part of insolvency law for Trust Deeds, Sequestrations, Liquidations etc which allows a Trustee (Liquidator) to recover property (assets) which have been transferred by an individual before signing a trust deed or going bankrupt etc.
If an individual transfers assets to an 'associated person' in the period of 5 years before he signs a Trust Deed or goes bankrupt, then the trustee can challenge the transfer if he feels that the asset was transferred for an undervalue or for no value. If the transfer was not to an associate ( a guy in the street!!) The time period is 2 years.
However a person can defend the action if he can show (prove)
(a) that immediately, or at any other time, after the transfer his
assets were greater than his liabilities; or
(b) that the alienation was made for full value; or
(c) that the transferÔÇö
(i) was a birthday, Christmas or other conventional gift; or
(ii) was a gift made, for a charitable purpose, to a person who is
not an associate of the debtor and it was reasonable for the
transfer. 'Here Mum have my house' is not a defence!!
If the Trustee raises the action and wins, then the asset is returned to the position it was before the transfer.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
06/04/2012 11:50 am
Thanks for adding that useful information Mark.
In the advice team we sometimes hear from people who are considering gifting their assets to family to protect them from a trust deed or sequestration.
It's important that the information is "out there" that this at the very least isn't going to be effective and also that it could cause very awkward ramifications for a number of people later when it is discovered. Obviously it's totally unfair on creditors as well.
It's also important so that persons have the information to protect themselves from questionable accusations of having done this.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
Topic starter
06/04/2012 9:16 pm
Hi TDA
There are a number of aspects to this and they tend to fall into 3 groups, those who purposely do it to avoid creditors, people who do it with no thought to future finance and those who take advice and try to protect their position in the event of future issues. In my experience the 1st group is very very rare.
It is important that people know the position as Trustee's tend to steamroller these things, when there may well be reasonable defences.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
