Sound asset protection strategies minimise the risk of losing your financial assets in life as well as death. But why is it necessary to rethink asset protection when you’ve already been through this with your adviser? At OBT we see six areas in which you could be exposed by not having proper asset protection:
1. Litigious society – better information about our legal rights and the ease of taking legal action creates a greater likelihood of being sued
2. Business owners need succession plans – as you move toward retirement or a succession phase, separate your business assets from your personal assets
3. Marital breakdown and mixed marriages pose many questions, but remain unclear what the rights are and that assets are protected accordingly
4. Changing, complex tax laws may mean deficiencies in business structures which have significant tax impacts
5. Insurance company reluctance to pay out claims, and
6. Business bankruptcy on the rise – ensure assets are separated so that, if your business takes a downward turn, your house is not going to go with it.
OBT puts in place comprehensive checks and measures to ensure your asset protection strategy is thorough. It is crucial that the correct choice of business entity is made. Usually done in business start-up phase, or if your business has already commenced trading, we complete a business entity review to ensure your business and personal assets are protected prior to financial difficulty or litigation proceedings commencing.
Choosing an appropriate business entity depends on numerous factors such as tax implications, complexity, or cost and benefits to be obtained. Additionally, trading activities should be conducted by one entity and assets held by a different entity.
Estate planning is often overlooked. If you are entitled to an inheritance be aware that, in the unlikely event of your bankruptcy, your inheritance will form part of your assets available for distribution to creditors. Your Will should be suitably drafted to ensure that your assets are, too, held by a ‘low risk’ individual and are transferred so that they are not left to an ‘at risk’ individual. It is extremely important for the individual owning or controlling assets to become the ‘low risk’ individual. Also, in the unlikely event that an individual becomes incapacitated, the Public Trustee will be appointed leaving the remaining individual disadvantaged and having to deal with them. Having an Enduring Power of Attorney is a real necessity in many cases.
Asset protection is just one part of the OBT’s Building Blocks© for organising your business and personal financial affairs. Contact us for a second opinion on your existing asset protection arrangements.