As a debt collector I have seen an increase in requests to collect money from trusts. Given the number of trusts out there this does not surprise me.
The challenge for creditors of trusts is who is liable for the debt? This is because the only record of who the trustees of a trust are is in the trust deed and associated documents. It could be argued that creditors should ask for copies of trust deeds before they extend credit to a trust but I would have to say this is most impratical when a debt is for a small amount.
To lower the risk of doing business for creditors I think it would be a good idea to register trusts in much the same way as companies are registered. It would be straight foward and allow anyone to know who the trustees of a trust are. (Trustees are personally liable for any debts incurred by trusts but I have my doubts that many are aware of this)
It is interesting that an article in yesteredays Sunday Star Times also discussed the benefits of registering trusts and listed 10 reasons to do so. I would suggest that resons 2 & 9 are relevant for creditors, just look at their titles- Defying Creditors & Introducing Complexity.
I would be interested in your feed back on this idea.
