It is quite common for clients to approach our office to ask for the ‘bulletproof’ way in which to protect their assets.
While there are many ways in which you can structure your affairs in order to protect your assets in the most effective manner, there is no one single structure that works universally for all situations.
Traditionally, the trust has been the most common structure in which people place assets in order to protect their assets.
This is useful as the individual does not have ownership of the asset and therefore in the event that the individual is sued or faces personal insolvency, the asset does not come into play.
However, recent changes such as the advent of the Personal Properties Security Act have changed this legal landscape, and now more consideration and attention needs to be paid to these structuring issues.
Issues with Using Trusts
Consider certain circumstances where an individual is also the only beneficiary, sole trustee and appointor of the trust. These trusts have routinely been considered to be an asset of the individual and can be recovered against.
Further, consider also where there are loans and liabilities between related parties, possibly between different trusts or between individuals and trusts. In these circumstances, the trust arrangement can also in practice fail, as the related circumstances mean that practically loans are called in and assets in other entities or trusts have to be sold.
It is for these reasons, and many others that Business Planning, asset protection and Estate Planning must all be considered on an individual basis and not on a ‘one size fits all approach’. Every family is different, every personality is different and every client owns different assets in different structures and capacities. Therefore, your professional advisors must work with you individually in order to prepare a plan that works for your circumstances, asset structures and personal wishes.
Bullet Proof Asset Protection?
We have recently seen the rise of a number of packages online which promise asset protection as ‘bulletproof’ and guaranteed and provide a certain pack to the consumer, which if followed would guarantee their asset protection.
This is a very dangerous gamble to take with your assets, as it is akin to purchasing a do it yourself will it at the newsagent and preparing your own documents, While it may save you some money in the short term, it will only be when the structures are put to the test that you find out that the package purchased was not suitable for your needs. Unfortunately, it is usually at this stage that far more funds are used in litigation than would have been used initially to properly and appropriately set up the structures in accordance with your own personal circumstances.
Legal / Tax / Financial Issues
You need your financial advisors to work with your legal advisors to ensure that your asset protection is both suitable and will work in practice. When both these parties work together in preparing your asset protection or planning matters, they are better able to understand the practical effect of the plan and how it may unravel when tested.
When both professional advisors are engaged to work in concert, you can obtain valuable further advice such as advices on insurances, borrowings, appropriate tax treatments as well as advice in Wills, Trusts and your Estate matters including any related superannuation matters.
Ascendia Lawyers works in unison with the other Ascendia Professional Services to ensure that your assets are held in the optimum manner for your personal circumstance, with regards to asset protection as well as your other lifestyle and personal factors to ensure that you have the best possible outcome in the event of a problem or issue arising.
Please contact our office to make an appointment with our Legal Practitioner Director at Ascendia Lawyers in order to further discuss your personal circumstances.