Discussion in 'Accounting, Tax & Legal' started by Simon Hampel, 22nd Sep, 2005.
Use this thread to discuss the article Don't panic! The real story on asset protection
Don't panic! The real story on asset protection Pt2
In the subject article you wrote:'It follows that in evaluating the level of protection implemented through utilising different investment structures and other risk mitigation strategies should be commensurate with the investor’s risk level. Even if you own your investment properties in your own name, there are some asset protection “tricks” you can use to
make it more difficult for third parties to access them.'
Are you able to expand on the 'tricks' you mentioned? I'm a relatively 'low risk' individual from an occupation, relationship, office bearer perspective and am building wealth in my own name ie no trusts (yet). So, I'm interested in other asset protection initiatives.
The simplest one is to keep the assets in your own name highly geared. So you'd make sure you regularly revalue your IP (which you should be doing anyway), draw down that equity and invest it through a structure (such as a family or hybrid discretionary trust). In this way you are effectively harvesting that spare equity and storing it somewhere more protected.
There are other approaches such as putting most of the ownership of the assets in the lower risk of two spouses, bare trusts, second mortgages over properties to secure loans to you from a trust etc etc. But each strategy has pros and cons and costs involved.
Good well balanced article.
Finally some hard data proving there's not "litigation explosion" as the asset protection "consultant" spruikers would have us believe.
Don't get me wrong, asset protection is a live issue and structuring your affairs using trusts etc is the way to go in my opinion, but don't leap into it out of fear (or use one of the overpriced underqualified "asset protection consultants" touting in cyberspace).
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