Asset Protection

From: Michael G


Hi Peoples,

Thought I'd post this because, well its something I think should always be considered.

I mean we're spending $$$ in the 1000s in learing and acquiring assets and to me asset protection is simply a form of insurance. We insure our cars, personal effects, home and income, why not have the same level of protection for our livelyhood, ie the cashflow and capital that our assets create?

I also thought this would be a good newbie post. I know there are now many younger investors out there with thoughts of marriage far off (if at all), but what happens when the girlfriend want's to move in?, when do things become defacto in the eye's of the law?, how safe are your IPs if it doesn't work out?

Reading an interesting book at the moment "The Complete Guide: How to LEGALLY PROTECT Your Assets, A Stateside and Offshore Planning Guide to Wealth Preservation Techniques" by David A. Tanzer. (American law, but concepts very applicable).

Nice easy read, but I just had to quote some sections on relationships.... :)

Cohabitation Agreements:

A simple document that each and every non-married couple should have before they first place their heads on the pillow in the new bed, is called a Cohabitation Agreement. You should spell out how much each contributes financially, and what it is to be used for.

Importantly, you should spell out very clearly that in fact the money paid to live in the same home is "rent" and not a contribution towards the mortgage of the other. And improvements and decorating, even if the home increases in value, does not give rise to claim in the home or property of the other.

Indemnification against the other against any household credit accounts, or common charge accounts, is essential. That way you can proceed in court against your ex for their share of unpaid amounts due and owing, assuming that you can locate and extract money from the deadbeat.

Better yet, avoid joint credit accounts altogether and reflect any inequities in the amount of the "rent" payment. That way you can make certain that you pay what is in your name and not worry about your lover's failure to meet their obligation.

The Cohabitation Agreement should spell out each and every financial obligation that arises between the two of you. And significantly, it should set forth what happens on the financial side of the relationship in the event it fails, however unlikely you believe this to be.

One of the great benefits of thinking through how to unwind a relationship from the start, is that both parties will know exactly where they stand from the beginning if it becomes unglued. When love is in the air, what better time to sit down and communicate and openly talk about these things. If you can not do it then, when else?

Do you think that when the bitterness and spite set in at the time of a break up, you can really deal with these important matter? Don't worry, you will still have other things to argue about, but at least your finances are in order!

(I like this guy's words about pre-nups)

The union of a couple in ceremonial matrimony brings with it significant financial responsibilities. This is particular true where there are unequal assets brought into the picture or children from an earlier relationship. Is this new, legally binding relationship a gold mining function for one of the partners? Or is it really true love? If it is true love, then let's put the cards on the table.

What was the attraction in the marriage in the first place? If not money, then let's make that clear on written document. If the other party truly does not want your assets, then get their signature on the Prenuptial Agreement already. Let's keep things honest from the get-go.

(just one more word on the subject)

Formalise Personal Relationships:

Moreover, there are two opposite and extreme sides, both irrational, to love and breaking up. If not you, I am certain that you have witnessed friends of yours, men and women, that conduct their personal affairs in an unquantifiable and unpredictable manner when in love or upon a falling out of love. Their actions might be characterised as simple stupid. Entering into a written agreement when cohabiting with another, when sharing a common law marriage, or prenuptial agreements before entering into marriage, at a time when common sense prevails, is the best protection to preserving your assets. Do not worry, you will still have things to argue about anyway.

(I think he put's it nicely).

Regards
Michael Gruber
 
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Reply: 1
From: The Wife


Michael,

As much as I think you are paranoid, and the subject distasteful,

It was brought to my attention recently, that the reason why I lost my first fortune, was because I had no asset protection and my first partner got nasty, and 'went' me, for the lot, and he got most of it. Now I am older and wiser, I have protection, and if current hubby ( bless his handsome heart, i love him to death)decided to 'go' me, I would be better protected, and I now also know about kneecapping.

SO I will mock you no longer...your not paranoid, you are correct :eek:)

TW
~Life is a daring adventure, or nothing at all~
 
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Reply: 1.1
From: Ian Findlay


Hi all,

The best answer of all is to marry (not hitch up with) someone who has IPs
or at least assets similar to yourself and no children as well as similar
incomes. That way all is equal.

Thats what my wife and I did (we didn't know about each others assets until
quite far down the road though). We both activly pursue our
investment/retirement plan and are building up our assets for our blissful
retirement. Pretty sad for a couple in their mid-30s but we both wish we'd
started even sooner.

Ian
 
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Reply: 1.1.1
From: The Wife


Oh Ian......

In a perfect world maybe....

TW
~Life is a daring adventure, or nothing at all~
 
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Reply: 1.1.1.1
From: Ian Findlay


I know its sooky but it works for us.

Ian


> From: "The Wife" <the_wife@bigpond.com>
>
> Oh Ian......
>
> In a perfect world maybe....
>
> TW
> ~Life is a daring adventure, or nothing at all~
>
>
>
> To reply: mailto:propertyforum.5652@bne003w.webcentral.com.au
> To start a new topic: mailto:propertyforum@bne003w.webcentral.com.au
> To login: http://bne003w.webcentral.com.au:80/~wb013
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Reply: 1.1.1.1.1
From: GoAnna !


I think the importance of partnerships is something that is rarely touched on in this forum and yet it is vital.

In this ever changing world it is sane and sensible to protect your interests however gone about the wrong way you will destroy much of the power of partnership.

Money is a wonderful thing but it is not the only contribution to a relationship. Ask any stay at home parent! Early on in our relationship (prior to marriage) my husband and i bought a house together. He provided all of the deposit. I sourced a property well below market value. I had the vision to improve this property and set about doing it with my own hands. How should each of our contributions be valued in this situation? If he had said i will buy a house and you can rent from me do you think I would have stayed? I doubt it.

As it was we shared a vision and each brought what we could to the table. Neither of us could have achieved what we did alone and our recognition of this is one of the strengths of our partnership.

GoAnna !
 
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Sim

Administrator
Reply: 1.1.1.1.1.1
From: Sim' Hampel


I agree GoAnna !

I must add that if people are going to be spending their whole lives suspicious of their partner's intentions in regards to your money, then I think that is a very sad reflection on today's society, and you will never live a truely happy and contented life together.

I was fortunate in that I married young, before either of us had anything in real assets. Everything we have achieved as a couple has been the result of work we have done together. Therefore it is easy for us to decide to share absolutely everything in our lives, including our wealth.

I can see how it gets more complicated when you have done a lot of work on your own, and have significant wealth already when you meet someone you may like to spend the rest of your life with.

I have my own opinions on how to deal with these matters, but which are not really suited to discussion on this forum, as they quickly leave the realm of property investment and enter the realm of personal belief systems ! Much more suited to a heated debate over coffee very late at night !

 
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Family court (long as usual)

Reply: 1.1.1.1.1.1.1
From: Paul Zagoridis


The Family Court of Australia has wide ranging powers based in law and equity. Good luck on relying on your pre-nup (even though they are finally available in Oz).

FCA can and do make decisions putting aside superannuation restrictions and trust structures.

Imagine a non-working spouse sat on their... couch, had a couple of kids, hired a housekeeper and nanny, and did nothing else. After 15-20 years you'd be looking at splitting your asset base in that spouse's favour (even if there are no kids). Family Court is social engineering - fact of life - live with it or get over it.

Nella and I met on the first day of orientation for Uni. We built an asset base and went bankrupt.

So for us the second time around (and this time with kids), it's pretty simple. Anything goes wrong with "us" then Nella gets it all.

Why?
1) I'm likely to build it all back again. Stats for 5+ yrs after divorce show most men are financially extremely better off than when married. Most women with kids are financially worse off (barely subsistance) after 5 years. Source - lots of stuff I read/researched when working at Legal Aid and as a Divorce and Child Custody mediator.

2) why make a lawyer rich fighting over it.

3) hopefully she'll let me continue managing the kids trust funds. But if not then I walk away (see 1 above).

4) we may not be married but we're parents for the rest of our lives. Why get bitter?

Dreamspinner
 
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Reply: 1.2
From: Michael G


TW,

OH MY GOD!

Hang, just want to get that down in writing

"...your not paranoid, you are correct"

Woohoo!

I think I'll have that as a referral on my business card.


Michael Gruber
"...your not paranoid, you are correct"
written and spoken by TW.
 
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Reply: 1.2.1
From: Michael Yardney


Having been through a ripper of a divorce a few years ago, and having parted with more than 60% of my assets (voluntarily), I learned a few things;-
1. Friends, family and relationships are more important than all the properties.
2. The knowledge that I had gained over the years was more valuable than the properties. This couldn't be taken away from me and allowed to to rebuild my wealth quicker and more safely than the first time round.
PS I'm happily married again, but with a prenuptual agreement (for what it is worth)
Michael Yardney
Metropole Properties
 
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