Many Australians who have built up their entire wealth and property portfolio in their personal names are especially vulnerable to losing their assets. Assets owned in personal names can be better protected without triggering taxes if you get asset protection advice. Asset protection is a process of protecting a business or personal property from risks such as lawsuits, bankruptcy, claims and divorce settlements. For example, if you lose the lawsuit, you could easily lose everything you own including all of your life savings. Even successful businessmen and big corporations are not exempt from the risks of a bankruptcy. Only those who are wise enough to protect their money can withstand a financial blow. No matter what industry you are in, asset protection is a must regardless of whether you run a large or midsized company or a proud owner of a small business. There are various strategies that Straits Lawyers can use to minimize the risks of losing your assets.
The strategy used depends on the amount of money and the risks involved.
How can you protect your assets in Australia?
Choose the right business structure
There are multiple considerations to make before deciding on the right business structure, but in terms of asset protection, sole traders and partnerships are not the best options. In Australia, if you are a sole trader or an individual partner in a partnership, your personal assets are exposed to business liabilities. Companies and trusts offer somewhat more protection.
Separate personal from business
Do not mix your business activities with your personal. You should have a separate bank account for your business, and your business name should be used on all business documents. That way if your business runs into trouble, your personal assets may have more protection.
Use the correct procedures
If you act negligently or do not meet your legal obligations, creditors may have grounds to get at your personal assets. To avoid this, you should ensure your contracts, agreements and procedures are carried out professionally and meticulously. Effective and robust contracts can help limit your liability with relevant stakeholders.
Use trusts and other entities
Discretionary trusts are another strategy business owners can use to protect their assets. When you are the beneficiary of a discretionary trust, you do not own any of the trust’s assets which means your creditors will have a difficult time making a claim on them. While trusts and other entities can be an effective strategy for asset protection, the finer details can be complex and professional assistance is key.
If you would like to inquire about an asset protection plan for your business or personal matter or find out more about your rights and options, Straits Lawyers are here to help. Simply send us an email at firstname.lastname@example.org or give us a call on 8410 9069 to arrange an appointment for an online interview.
Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.