Asset Protection

[mins]

I understand that I should seek legal advice and I will. I have a general question in which I would just like to know if what I am thinking is possible.

My husband has a past (if you get my drift). I work full time and am in the throws of buying a PPOR property after selling our PPOR in Sydney 10 months ago. I plan to purchase said property solely in my name given the fact that my DH doesn't work.

Anyway, what I am wanting to know is if it is possible to purchase this property and future IP's in my personal name but IF something was to happen to me, all property goes into trust for my son who is currently 5.

DH can be paid an income to support our son and he will have a house to live in etc BUT all assets are protected for my son's benefit and I appoint a separate administrator of the trust?

Would this then protect my assets for my sons future and not allow DH's ex or ex's family to claim full or partial entitlement in the event something happens to me?

I hope I have explained this correctly. I will seek legal advice but am just curious if I would have to purchase through a trust for this type of asset protection.

 

[Aaron_C]

Yes that is certainly possible. You will have to draft up a will dictating who your executor of your estate will be (perhaps a close friend, or even your husband), and who the beneficiary will be (your son in this case).

 

[RedCat]

I know having spoken to my lawyer when we had wills drawn up last year, that IF you leave anything to your partner, then his future partner could have claim on it because you left it to them and therefore they can do as they please.

I would ASSUME it's deemed more important by a court to provide for your son than a partner but maybe you need to get a will drawn up.

My accountant told me that any assets/equity you have prior to entering a new relationship are yours, but anything gained during the partnership belongs to both of you.

Of course all this information related to my personal situation at the time and may no longer be relevant or accurate so obviously seek proper advice

 

[mins]

Yeah my husband and I have been together for 9 years. It isn't that I don't want him to have anything BUT he is useless with money and spends it like water.

I would be wanting to leave all major assets (superannuation, property and shares) in trust to my son so ex can't claim on it. If there is a small amount of money in the bank or general possessions I am not too worried about this. Mainly because just about every possession I have is worth nothing and wanting to be an investor most of my money would be tied up in some type of investment except for my emergency buffer.

Very glad to know it is possible and I will seek legal advice.

 

[Terryw]

Good to see you considering this because many don't. in fact most don't. Many people set up things for asset protection and may have nothing in their own name then a relative dies and leaves them a house just as they are in the middle of bankruptcy.

There are a couple of issues.

1. You say you sold 'our house'. That implies he owned half or part. You are then buying in your own name. That in turn implies that some of his money will be used to purchase the new house. It could be construed that you are owning part of this new house as trustee for him.

How is going to pay for the new house? If he contributed in the form of helping to pay the loan and other non-financial assistance then this strengthens the argument that you are trustee for him.

2. Family provision sections of the Succession Act in NSW (only) allow an ex-spouse to make a claim on an estate if they have not been aedequately provided for. This would be if he dies. There is also a section where assets a person does not own can be part of their estate for family provision claims, i.e notional estate. This includes assets sold or transferred prior to death and assets held by another. This could apply here. Notional estate is generally limited to assets transferred in the 3 years prior to death.

3. For your will you could set up a testamentary discretionary trust for your main residence and/or other assets. You can have multiple trusts with one for each major asset or one for different family members. eg. you could have the house pass to two testamentary trusts.

You can have the trust set up to allow your husband to control it or have him and another person such as family member, or even an professional outsider - watcht the fees.

The benefits of a testamentary trust is that any income produced by the trust is classed as 'excepted income' and is taxed at adult rates when received by children. Normally they pay penalty tax rates. So a kid could receive up to $16,000 pa tax free this way..

There are asset protection benefits and these can be strengthened by the way it is set up.

However, leaving a house to a trust could mean land tax and CGT would apply. but there are some ways around this too.

4. Superannuation is not part of your estate and cannot be taken care of in your will. You will need to do a binding death benefit nomination with the trsutee of the fund. There are asset protection and tax issues here too.

You could have it pass to your estate, but then it could be at risk if your will is challenged. Or you could have it pass to your son and/or husband or to a superannuation proceeds trust.

5. If you die before setting all this up and without a will then your house will pass via the intestacy rules. You could get the whole lot, but if he has children from a previous relationship then you would have to share.

If your 'husband' is still legally married to another, and this happens because people don't finalise divroces, then you could have to share his estate if he dies without a will.

6. Consider that you could both die together in an accident. If you were older than him then it could be presumed that you died first and he inherits your whole estate and then passes under the intestacy rules for him