BulletProof Asset Protection and Ed BURTON
- Thread starter redwing
- Start date
I know him and his stuff very well. He is a retired accountant worth goodness knows how much (by my estimates a LOT more than the $7m in his sales letters). He owns around 70+ properties (all residential positively geared), is very knowledgeable in asset protection (gets a lot of his info from liquidators and legislation) and offshore.
Not sure what you want from him because he wont be running any seminars for some time (bad back) but I can certainly recommend his knowledge.
Tubs
Not sure what you want from him because he wont be running any seminars for some time (bad back) but I can certainly recommend his knowledge.
Tubs
Hi Redwing,
As Tubs mentioned Ed is very knowlegeable in the tax/asset protection field. He has formed a core of tax and legal experts to produce brilliant asset protection strategies and has trained consultants marketing and distributing his ideas. As bicko and keithj have mentioned I am one of his consultants.
The "BulletProof Asset Protection" mentioned is the name of his latest book on asset protection strategies and structures. The language may seem over the top but in all the years that he has been doing this, none of his structures have been breached when tested.
One of the cases he mentions is a client who had numerous property assets unprotected. He chose to only get one new property properly asset protected. The client was later attacked and bankrupted - the only property the liquidator could not seize was the one Ed protected.
Hope this information helps answer your question Redwing
As Tubs mentioned Ed is very knowlegeable in the tax/asset protection field. He has formed a core of tax and legal experts to produce brilliant asset protection strategies and has trained consultants marketing and distributing his ideas. As bicko and keithj have mentioned I am one of his consultants.
The "BulletProof Asset Protection" mentioned is the name of his latest book on asset protection strategies and structures. The language may seem over the top but in all the years that he has been doing this, none of his structures have been breached when tested.
One of the cases he mentions is a client who had numerous property assets unprotected. He chose to only get one new property properly asset protected. The client was later attacked and bankrupted - the only property the liquidator could not seize was the one Ed protected.
Hope this information helps answer your question Redwing
Thanks wbthom
Thanks,
everything i've read seems to be positive on the man and his knowledge, doing a search on the book "Bulletproof Asset Protection" i could only find the book by William S. REED though?
http://www.amazon.com/exec/obidos/tg/detail/-/0971873402/102-3733812-5426519?v=glance
Thanks,
everything i've read seems to be positive on the man and his knowledge, doing a search on the book "Bulletproof Asset Protection" i could only find the book by William S. REED though?
http://www.amazon.com/exec/obidos/tg/detail/-/0971873402/102-3733812-5426519?v=glance
I saw a similar article in a weekend real estate paper talking about bullet-proof asset protection. Interesting that the individual said "He said asset protection involved a $3,000 - $5,000 one-off payment". Im not sure whether this includes tax file number registration, issuing of special income units where appropriate, documenting appropriate resolutions, providing the client with a checklist of things they need to, etc but this price seems very high. Even with a corporate trustee a hybrid discretionary trust should be able to established for around $2,500 including the initial consultation. With a unit trust and all the units issued to a hybrid discretionary trust (the most flexible structure as Chris Batten would say) would cost around $3,500. This would also include the first consultation to discuss the advantages and disadvantages of such a structure.
I know that not all trust deeds are similar, but ive seen some of these deeds, and they seem to be the same ones from Macquarie Group Services. The even more ironic quote was "Many people actually make money from the asset protection process". Well if the same deeds (not quite sure what deeds this individual is using but the MGS deeds are used by many of the asset protection specialists) are being used then what are people getting for the extra money. Id be asking who constructs the deeds and if the answer was MGS then that price is way too high.
I know that not all trust deeds are similar, but ive seen some of these deeds, and they seem to be the same ones from Macquarie Group Services. The even more ironic quote was "Many people actually make money from the asset protection process". Well if the same deeds (not quite sure what deeds this individual is using but the MGS deeds are used by many of the asset protection specialists) are being used then what are people getting for the extra money. Id be asking who constructs the deeds and if the answer was MGS then that price is way too high.
??? so many choices..
I've had a look at some of the structures via Chris Battens group MGS on their site, the whole business seems very complicated with a myriad of structures..and the different Asset Protection Specialists also seem to have different opinions, i guess there is no "one" best structure..
HDT's seem to be good for the average property investor?
Someone was saying a respected property investor we know uses a basic Family Trust with a $2 company involved for asset protection..i'm also interested in the other benefits of the Trust structures, though we all have to be aware of litigation in this day and age..
Without holding you down to $ and c wbthom and knowing each situation is different..what are the normal charges for average investors when setting up these structures, and maintaining them each year?
REDWING
I've had a look at some of the structures via Chris Battens group MGS on their site, the whole business seems very complicated with a myriad of structures..and the different Asset Protection Specialists also seem to have different opinions, i guess there is no "one" best structure..
HDT's seem to be good for the average property investor?
Someone was saying a respected property investor we know uses a basic Family Trust with a $2 company involved for asset protection..i'm also interested in the other benefits of the Trust structures, though we all have to be aware of litigation in this day and age..
Without holding you down to $ and c wbthom and knowing each situation is different..what are the normal charges for average investors when setting up these structures, and maintaining them each year?
REDWING
CoastyMike.
Ed tends to play it safe with asset protection and tends not to favour hybrid trusts - not because they are bad but more because he feels that users can make more easily make mistakes and compromise their asset protection.
Asset protection can simply be advising people who holds what - at negligible cost - sometimes it can be setting up multiple structures for business - a mention of a blanket price is nonsense. It's a specialised service with a fair bit of hand holding and attention to detail.
Ed's trust deeds are definately not from MGS - his legal team have set up trust deeds that can be tailored if need be to special needs but are highly flexible.
Ed tends to play it safe with asset protection and tends not to favour hybrid trusts - not because they are bad but more because he feels that users can make more easily make mistakes and compromise their asset protection.
Asset protection can simply be advising people who holds what - at negligible cost - sometimes it can be setting up multiple structures for business - a mention of a blanket price is nonsense. It's a specialised service with a fair bit of hand holding and attention to detail.
Ed's trust deeds are definately not from MGS - his legal team have set up trust deeds that can be tailored if need be to special needs but are highly flexible.
Bill,
I agree that hybrid trusts can be difficult for the average person to understand. However if you want to obtain the benefits of negative gearing to the highest income earner and also hold the property in a trust how can it be done without the use of a HDT. In this case the individual is borrowing funds to purchase special income units in the HDT (used to earn income and therefore the interest on the loan will be deductible) which the trust then uses those funds to invest in property. If you borrow funds from the bank and then lend these fund to a discretionary trust you wont be able to get the benefits down to the highest income earner.
If you are simply looking at asset protection and the property is positively geared or not even earning income then a discretionary trust may be appropriate. However the capital gains tax and stamp duty on the transfer to a trust could be significant. If the asset is pre CGT it is even worse because the moment you transfer it to a trust you loose the pre CGT status.
Agreed that a discretionary trust for holding or trading through a business structure is a suitable vehicle. Again you need to determine whether the investment is going to be positively or negatively geared. If the trust is loaning the funds and you end up with a revenue loss after taking into account interest deductions you are going to have to meet the trust loss rules or alternatively make a family trust election to carry these losses forward. You would also want to make sure it is a discretionary trust and not a unit trust otherwise the owner may not be able to avail themselves of the small business CGT concessions. Again transferring existing business assets (including goodwill) to a trust could result in a signifcant CGT liability (the CGT rollover provisions only apply to trust to company transfers not the other way round). The client will also need to consider the general value shifting provisions and whether they are caught by these. Ive also seen some accountants distributing funds to the corporate trustee without a mortgage over the unpaid present entitlement (ATO has advised this will lead to a potential Part IVA issue) This was confirmed by Harwoods Lawyers at the recent 2005 Trust Intensive Seminar held by the Taxation Institute of Australia.
I have heard a few people say you can use a discretionary trust and still get the negative gearing benefits down to the appropriate person but when I ask how everyone goes silent.
With respect to prices I agree that unless you know an individual's circumstances it is difficult to give a blanket price but in our case I always tell clients a HDT, Discretionary Trust or Unit Trust will cost $1,000 to establish (excluding the stamping of the trust for NSW clients which is $200 per deed) $1,500 for a company and consultation fees are $220 per hour (including GST). I sometimes have people come in for their first consultation pay their $220 and do not proceed because the other costs for setting things up are too prohibitive. Business restructuring is an entirely different issue and without knowing their current structure and goals then the first consult is essential and only then can you advise on cost. If someone wants to negative gear through a trust however and are purchasing a property I would be advising them that it would cost $1,000 for the HDT, $220 for my consultation and $1,500 if they wanted a corporate trustee.
I agree that hybrid trusts can be difficult for the average person to understand. However if you want to obtain the benefits of negative gearing to the highest income earner and also hold the property in a trust how can it be done without the use of a HDT. In this case the individual is borrowing funds to purchase special income units in the HDT (used to earn income and therefore the interest on the loan will be deductible) which the trust then uses those funds to invest in property. If you borrow funds from the bank and then lend these fund to a discretionary trust you wont be able to get the benefits down to the highest income earner.
If you are simply looking at asset protection and the property is positively geared or not even earning income then a discretionary trust may be appropriate. However the capital gains tax and stamp duty on the transfer to a trust could be significant. If the asset is pre CGT it is even worse because the moment you transfer it to a trust you loose the pre CGT status.
Agreed that a discretionary trust for holding or trading through a business structure is a suitable vehicle. Again you need to determine whether the investment is going to be positively or negatively geared. If the trust is loaning the funds and you end up with a revenue loss after taking into account interest deductions you are going to have to meet the trust loss rules or alternatively make a family trust election to carry these losses forward. You would also want to make sure it is a discretionary trust and not a unit trust otherwise the owner may not be able to avail themselves of the small business CGT concessions. Again transferring existing business assets (including goodwill) to a trust could result in a signifcant CGT liability (the CGT rollover provisions only apply to trust to company transfers not the other way round). The client will also need to consider the general value shifting provisions and whether they are caught by these. Ive also seen some accountants distributing funds to the corporate trustee without a mortgage over the unpaid present entitlement (ATO has advised this will lead to a potential Part IVA issue) This was confirmed by Harwoods Lawyers at the recent 2005 Trust Intensive Seminar held by the Taxation Institute of Australia.
I have heard a few people say you can use a discretionary trust and still get the negative gearing benefits down to the appropriate person but when I ask how everyone goes silent.
With respect to prices I agree that unless you know an individual's circumstances it is difficult to give a blanket price but in our case I always tell clients a HDT, Discretionary Trust or Unit Trust will cost $1,000 to establish (excluding the stamping of the trust for NSW clients which is $200 per deed) $1,500 for a company and consultation fees are $220 per hour (including GST). I sometimes have people come in for their first consultation pay their $220 and do not proceed because the other costs for setting things up are too prohibitive. Business restructuring is an entirely different issue and without knowing their current structure and goals then the first consult is essential and only then can you advise on cost. If someone wants to negative gear through a trust however and are purchasing a property I would be advising them that it would cost $1,000 for the HDT, $220 for my consultation and $1,500 if they wanted a corporate trustee.
redwing said:
Redwing the main problem with most people is trying to do too many things with the same structure. For best tax returns for personal investors HDT's certainly have advantages but have weaknesses re asset protection. Other structures are strong on protection but limit your borrowings and are less tax effective. Its like any investment choice - what do you want to achieve!
redwing said:
Family trusts are too limiting in the choice of beneficiaries - a discretionary trust with a well written trust deed opens up your range of choice. One of the better structures to hold assets (FOR ASSET PROTECTION!) is a discretionary trust with a company trustee.
Depending on who sets it up and the complexity of the documentation, state stamp duties, hand holding etc the basics can range from $2,500 to $3,500. Now to those who say they can get it cheaper - of course you can- but watch them break up in a law court if they are attacked. I believe you can get cheap trusts on ebay but I doubt they are worth the paper they are written on.
Holding costs depend on how expensive your accountant is - ring him up and ask!
Many people find structure choices confusing but you need to ask yourself this - How vulnerable are my assets to attack and how much protection do I need to help me sleep comfortably at night? A good structure set up at the right time (ie long before you have a need!) can save your total investments - the intial setup costs can become almost irrelevant.
Coastymikecoastymike said:
I can only speak from an asset protection point of view. As you mention HDT's appear to have many investment advantages but NOT for asset protection. To get a tax deductible interest you have to have personal borrowings - whether to buy units in an HDT or to buy a property in your own name. From a litigators point of view -YOU have some sort of vulnerable asset that could potentially be clawed back in a court case. The whole point of good asset protection is to look like you have NO personal assets at all.
You mentioned the scenario of borrowing funds and lending it to a discretionary trust - A good asset protection consultant would never let you do that. The correct way is for the trust (and only the trust!) to borrow the money. You only need to give the trust permission to use your existing property as security and permit them to be mortgaged - This way you personally have NO outstanding loans that can be clawed back and are better asset protected.
You are correct- this is generally way too costly. Some people would just put all future investments into a trust to protect them and accept the risk on the old assets. You can however also use other strategies to protect existing assets in a more cost effective way (eg cross securitisation and 2nd mortgage strategies).coastymike said:
The main message (as with any investment strategy) is decide what you want your system to do and build it correctly ahead of time if possible - do you want the most tax beneficial entity or do you want the safest - everybody's risk profile is different!
TerryW,
The answer is yes.
The answer is yes.
HDT do compromise the asset protection slightly but remember the individual will have borrowed funds to purchase special income units. Now when the lawyers starting looking for assets one thing that you will hold will be special income units (an asset) but remember you still have a loan to the bank (secured) so your net asset position may be nil. Even if you've repaid the entire bank loan then the trustee in bankruptcy will go after those special income units. However what are the value of special income units. They are not entitled to capital only income and a carefully drafted deed may provide the right to redeem the units at less than cost price. Similarly the deed may be drafted to minimise the income distributions. Not many lawyers are going to be interested in something that has no potential capital upside.
It is a compromise for reducing some aspect of asset protection to get the negative gearing benefits (but remember is costs vs benefits) The value of the special income units to a trustee in bankruptcy may be less than the taxation benefits from negative gearing and this needs to be evaluated during any consultation.
However later on when the investment becomes positively geared you can just redeem the special income units and you have the same type of protection with everything in the trust and the individual owing nothing. Best of both worlds with a small amount of compromise. I'd like to know any legal cases involving a trustee in bankruptcy who has claimed for the value of the special income units and what was awarded in those cases. If no cases are forthcoming then it weakens the argument that is sometimes put forward but what if. No what if. What has happened in the courts.
It is a compromise for reducing some aspect of asset protection to get the negative gearing benefits (but remember is costs vs benefits) The value of the special income units to a trustee in bankruptcy may be less than the taxation benefits from negative gearing and this needs to be evaluated during any consultation.
However later on when the investment becomes positively geared you can just redeem the special income units and you have the same type of protection with everything in the trust and the individual owing nothing. Best of both worlds with a small amount of compromise. I'd like to know any legal cases involving a trustee in bankruptcy who has claimed for the value of the special income units and what was awarded in those cases. If no cases are forthcoming then it weakens the argument that is sometimes put forward but what if. No what if. What has happened in the courts.
coastymike said:
At what loss level must a family trust election be done, so losses can be carried forward .
I remember someone mentioning $5000. Under that amount it neednt be done. Is that true?
GGump
That is incorrect. Trust loss provisions regarding carrying forward of trust losses start from the first dollar (or technically first negative dollar).
That is incorrect. Trust loss provisions regarding carrying forward of trust losses start from the first dollar (or technically first negative dollar).
coastymike said:
Coastymike,
Your points are all valid - from an investment point of view - but you miss the point from a true asset protection point of view. If you APPEAR to own nothing (not even HDT units) you are flying under the radar. If you are ever attacked you have two options - pay money so the problem will go away or pay solicitors to defend you - either way you LOSE. My philosophy is about making yourself invisible or an unpalatable target so you are never attacked in the first place! That may seem overly cautious but I sleep better at night.
