Liquidating a trustee company
However, to receive this favorable tax treatment, a trust must qualify as a liquidating trust.
By extension, a liquidator‘s fees and expenses canonly be satisfied from the assets of a trust if the fees and expenses relate to the administration of that trust.Often, a company will be a trustee for more than one trust, or will carry on business as trustee of a trust as well as in its own capacity.In those situations, the rationale behind the basic principles set out above become significant, and the circumstances in which various debts, expenses or claims were incurred will determine whether or not they can be satisfied from trust assets.Trading companies are usually closed down, although sometimes they may continue to trade for a short time so the business can be sold.When the liquidation is complete, the company is removed from the Companies Office Register.That is because a trustee‘s right of indemnity against a trust‘s assets of that trust.
Accordingly, if a company is the trustee of more than one trust, the debts and expenses incurred in the administration of one trust cannot be paid from the assets of the other.
Adding to the concern of trustees is the fact that, by its nature, the trust is designed to liquidate and distribute all of its assets.
As a result, while virtually all agreements governing such liquidating trusts contain indemnification and protecting the trustee except in the case of fraud or gross negligence, the trust may ultimately lack the financial wherewithal to support such provisions.
If the company goes into liquidation or the person enters a personal insolvency procedure, e.g.
bankruptcy, the guarantor will have to repay the creditor.
Ambridge also offers a unique tax coverage enhancement to its Liquidating Trustees Liability Insurance policy.