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Asset Protection

Asset protection is one of the most important protecting your financial future, ensuring valuable family assets and business assets and protected from “financial attacks”, business failure, family disagreements and other possible risks.

Typical strategies can include holding property in the name of a spouse who is less prone to risks, setting up discretionary trusts, and maintaining sizeable life insurance policies and investing in superannuation.

A well known method of asset protection is the trust. Here, the individual’s assets are owned by the trust, so the individual does not have actual ownership, though they have a degree control over the trust. This protects the assets if the individual if sued as they do not individually own the assets. Those who are in a higher than normal industry for litigation can buy their property in a trust and receive all the residence tax benefits.

Another trust called the “equity bank trust” caters to those with a more substantial asset base. This trust reduces equity to nil by acting as a lender, placing a second mortgage on the property. Since law suits are aimed at the equity, this is a very effective way to protect larger assets.

A family estate agreement protects wealth in a way that a will cannot. Unsecured creditors can initiate court action, leaving a will meaningless. This agreement ensures net wealth is passed on to a specified family lineage in the event of an individual’s death.

Though many believe they will not be sued in the near future, the reality is quite different. As more and more people look into asset protection against potential litigation, these strategies will be employed increasingly. With well advised execution, however, most of these methods cannot be unraveled easily, and the security they offer will ensure a well established asset base that cannot be shaken easily.

For more information about structuring your affairs through an appropriate entity, contact us on 1300 TAX 000 or at enquiries@tagwealth.com.au

GENERAL ADVICE WARNING:The information contained in this document may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal professional and financial advice prior to acting on this information.