Asset protection



From: Anonymous


My first post using the web board and I like it.

I am in need of advice as to what sought of structure offers the best form of asset protection from possible divorce proceedings.

I hope that hasn't sent you all running I don't plan on getting divorced but am concerned about protecting my assets.

I have a principal place of residence purchased many years prior to marriage and an I.P purchased just after marriage my wife has no interest in I.Ps and this property is only slightly -ve geared so doesn't affect income greatly.

From my research I understand a proprietary company is not the way to go but what about Trusts if someone could point me in the right direction of a suitable structure
(if one exists) for me to research further.

Any advice on this topic would be appreciated and I shall of course seek independent professional advice.

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Reply: 1
From: Sim' Hampel

Now I will qualify this up front by saying I am not qualified to give this sort of advice... you really should see an accountant AND a solicitor.

I have read about cases where people have moved assets into trusts to protect them from divorce settlement and the courts have succesfully gained access to the trusts to split the assets.

Now I think this was more about assets that were moved when divorce was already on the cards as opposed to earlier in the relationship when things were rosy, but I think you still need to be careful and don't just assume that your assets will actually be protected from divorce proceedings by placing them in some type of trust structure.

These days the courts can do all sorts of things to unravel structures or freeze assets... so do be careful and seek good advice.

The most common structure I believe is for you to set up a non-trading company for which you are a director. That company would be the trustee of the trust that holds the property. You yourself could be a beneficiary of the trust if you want to receive distributions directly, or you could have a company (might need to be a second company) as beneficiary, allowing you to reinvest distributions after paying a lower tax rate. I'm not sure if I have this part entirely correct.

Like I said earlier, for this type of protection, you really need to get some good advice from both an accountant AND a solicitor. Preferably a solicitor who has had experience defending cases where people have tried to get access to assets in a trust and someone who knows what the courts can and can't get away with !

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Reply: 2
From: Michael G


This has been a question on my mind too and believe me I've asked many people.

By the way, I haven't found a decent answer yet.

Tip #1, a structure is either good for tax minimisation or asset protection, rarely are they any good for both.

Tip #2, if you want asset protection, an accountant cannot help you. Why?, because a structure, when attacked, is attacked in the courts. You account will not be the person there defending your structure. It will be your laywer. So you need legal advice to set up asset protection (and an account for the tax side of things).

Tip #3, if you find legal advice who is willing to set up a structure, then find out if they are battle hardened. For example if you go to an accountant about property tax, then you will want to know if they own property themselves, to be qualified to talk about it right?, same goes for legal. If the lawyer sets up structure, you want to ensure that they've been gone through hell and back and survived. You want someone that when it comes to the crunch, they wont buckle under stress and they their documents stand up to another laywers attack.

Who would you rather have by your side?, an experienced mercenary or a green military officer who knows the textbooks, but has never seen combat.

Tip #4, when a structure is attack, make sure it is damn hard to release ANY funds. The funds or assets the other side gets their hands on WILL be used against you to fund further attacks to gain the rest. Basically you FEED the enemy to allow them to you longer.

These are just some things to think about and ask.

I would be interested to hear what you find out though.

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Reply: 2.1
From: Sim' Hampel

Thanks for that Michael, excellent post !

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