In Badenhorst v Badenhorst the court stated that the company law doctrine of piercing the veil should be extended to trust law. … The research explored the circumstances that warrants the piercing of a trust veil and it was found that the court is likely to pierce a trust veil if the trust form was abused.
Additionally, can a trust be pierced?
Spouses or children of the beneficiary may be able to take the trust assets if the beneficiary does not meet his financial obligations to them. … Finally, if the beneficiary has any back taxes or must pay any damages imposed by a court, the trust can be pierced to obtain the necessary funds to settle the debt.
Regarding this, which is the best explanation of a trust?
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.
Can creditors go after a trust?
A revocable trust, sometimes called a living trust, holds the assets of a trust creator (called a “grantor,” “settlor,” or “trustor”) during his or her lifetime. … As a result, a creditor could go after the trust, seek its termination, and gain access to assets within it.
What assets Cannot be placed in a trust?
Assets that should not be used to fund your living trust include:
- Qualified retirement accounts – 401ks, IRAs, 403(b)s, qualified annuities.
- Health saving accounts (HSAs)
- Medical saving accounts (MSAs)
- Uniform Transfers to Minors (UTMAs)
- Uniform Gifts to Minors (UGMAs)
- Life insurance.
- Motor vehicles.
What are the disadvantages of a trust?
Drawbacks of a Living Trust
- Paperwork. Setting up a living trust isn’t difficult or expensive, but it requires some paperwork. …
- Record Keeping. After a revocable living trust is created, little day-to-day record keeping is required. …
- Transfer Taxes. …
- Difficulty Refinancing Trust Property. …
- No Cutoff of Creditors’ Claims.
How does a trust work after someone dies?
If a successor trustee is named in a trust, then that person would become the trustee upon the death of the current trustee. At that point, everything in the trust might be distributed and the trust itself terminated, or it might continue for a number of years.
