Asset Protection – Creditor Remedy: Resulting Trust

A resulting trust is an equitable remedy. The creditor’s position is that an entity (e.g. a corporation) is owned by a “nominee” owner (who has legal title), but is presumed to be holding it for the benefit of a person holding equitable title, since the beneficial interest is not “enjoyed” by the legal title holder.

The nominee owner is presumed to be acting as a “Trustee” for the benefit of the beneficial owner. The entity has no business purpose (other than asset protection) and is a “trust” for the benefit of the beneficial owners (i.e. the equitable owner). If the creditor can prove that the entity “is a trust”, the creditor may overcome the exclusive remedy of a charging order, and obtain an equitable resulting trust entitling the creditor to access those assets held by the nominee (i.e. the entity) for the benefit of the debtor (i.e. the person holding equitable title).


Comments are closed.