Exclusion of the family home
In a trust deed, it is possible to exclude the family home and any equity in it. This is done with the agreement of the secured creditors. This is not possible under bankruptcy procedures and can be an advantage of a trust deed.
To be successful, the secured creditors must agree not to claim in the trust deed, and then the unsecured creditors have to agree to allow the trust deed to gain protected status.
If the unsecured creditors refuse to agree to the trust deed gaining protected status because of the exclusion of the family home (and any equity), the trustee can vary the trust deed to include it or look at sequestration as another option.
Before the client grants the trust deed:
1s166(2) B(S)A 2016•the trustee must provide the client and the secured creditor with a valuation, made by a chartered surveyor or other suitably qualified person, of the dwellinghouse (or part) which is to be excluded from the estate;
•the client must obtain the secured creditors’ agreement not to claim under the trust deed for any of the debt in respect of which the security is held, and any agreement so obtained must be set out in Form 1A.
This excludes the secured debt from the trust deed and the trustee can ignore any equity in the home.
More detailed guidance can be found in section 2.8 of the AiB’s notes for guidance for trustees.
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