Asset Protection

Reliable and Tax Effective Asset Protection Strategies

It can take a lifetime to grow your wealth and asset base, but only a moment in time for it to be lost and taken away. The fact is, Australia is one of the most litigious states in the world. So there is no surprise that protecting assets against frivolous creditors and lawsuits is increasingly becoming a common concern. When being sued, people want your money – they are after the liquid value of your assets, not necessarily the bricks and mortar or the tangible assets that you have. To avoid significant losses, it is important to have reliable and effective asset protection strategies so you can continue to grow your wealth and achieve your financial objectives.

Why spend a lifetime accumulating wealth and then leave yourself exposed to the risk of losing it all, all because there was no adequate asset protection plan or well thought out asset protection strategy? There are several mistakes when it comes to asset protection and prevailing myths that people have been led to believe regarding asset protection. Tap here or scroll down to read more on the top myths / mistakes about asset protection.

Are your assets adequately protected? 
Chan & Naylor are the leading asset protection specialists in Australia with advanced tax effective asset protection strategies and systems designed to preserve your wealth from generation to generation. Talk to us about your asset protection concerns.
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The Top Myths Property Investors Believe about Asset Protection

There are many different opinions about asset protection and different approaches to protecting assets. But there are prevailing myths and dangerous fallacies about asset protection that have led many people to believe that their assets are adequately protected. We’ll discuss some of the top mistakes that property investors make when it comes to asset protection (as a result of these prevailing myths), and outline some better and more reliable asset protection strategies unique to the asset protection specialists at Chan & Naylor:

 

  • Investments owned in individual names

For starters, property investors that own investment properties in their personal name has virtually no asset protection. This is the biggest mistake of them all. If you were to be sued by an unsecured creditor, subject to a falling out in a business partnership, or sued by an injured tenant or disgruntled employee, customer etc – you could potentially lose all assets held in your own name. Some people argue the tax benefits for owning property in an individual name. But what do those tax benefits count for, when you are at risk of losing it all?

Furthermore, many people think that by just buying an investment property or assets in their spouse’s name or de-facto partner’s name, would naturally give them adequate asset protection. This is not a reliable and effective asset protection strategy. In certain circumstances, many litigators and creditors have the power through the courts to lay claim to assets held under spousal or de-facto partner names. Furthermore, if you were subject family law court as a result of a bitter family dispute or relationship breakdown, you could potentially lose control over all assets. Who would want the in-laws to get control over your wealth? If you are seriously concerned about asset protection, you should avoid having assets like investment properties owned in any individual’s name.

 

So how can you effectively protect assets that’s already owned in your personal name?

For reliable asset protection, specifically designed investment structures can give you the peace of mind you’re looking for. However, there are many tax implications involved when transferring ownership from an individual’s name to another trust: including Capital Gains Tax and Stamp Duty. These are common tax trigger events. Land Tax Thresholds is also an important consideration among other factors that many people (and Accountants) gloss over when thinking about protecting assets.

At Chan & Naylor, we are the leading asset protection specialists in Sydney, Brisbane, Adelaide, Melbourne and Perth. We have created a unique asset protection system that’s designed to give clients reliable and tax effective asset protection – even asset protection for assets in personal names. We show clients how to protect assets in their personal name without triggering taxes.

You can learn more about our unique asset protection systems for assets owned in individual names called the Chan & Naylor Equity Shift™ and the ‘Chan & Naylor Equity Bank Trust’™ – designed to help individuals get the tax effective asset protection they’re looking for. Click here to download a free digital copy of our Asset Protection eBook: How to protect assets in your personal name without triggering taxes”

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  • Investments owned in a Company Structure

Some property investors believe that owning a property or assets via a company structure would give them asset protection. This is a dangerous fallacy. The key issue with company ownership is that the individual usually is the shareholder so they could lose the shares in a successful lawsuit and therefore lose the assets. Other problems companies might face are that it does not receive the 50% general Capital Gains Tax discount; it is inflexible on who can receive distributions, plus if the asset was negatively geared, the individual could not take advantage of the tax credits of the negative gearing.

Clearly there are many more aspects to asset protection, than just protecting assets. If you want reliable and tax effective asset protection strategies – trust the asset protection specialists at Chan & Naylor.

 

  • Property Investments owned in a Generic Trust

Traditionally, people have used Trusts to protect assets. For new / additional investment property purchases, a Trust is useful in this regard as the individual does not own the asset; it is owned by the Trust. Therefore, if the individual is sued they have no investment assets to lose as the individual controls the Trust but has no ownership. A Trust is controlled by either an individual or a corporate trustee. The income or losses captured within the trust can be allocated to one or more beneficiaries, who can be individuals or other structures.

However, there is no one size fits all when it comes to Trusts and their specific uses. Some Trusts are great for one particular use as they provide certain advantages over others, but in the end fail to truly provide tax effective asset protection. This is particularly true for property investors. If you want your property assets to be protected in a tax effective and investment vehicle, then you need to consider a property specific trust. A trust that is designed specifically for property investors. Likewise, for business owners operating a business and controlling assets, a business specific trust is recommended.

At Chan & Naylor, we found that property investors could benefit even more from their investing if they had an optimal tax environment in which to safely control their assets. For instance, there are certain tax benefits that property investors would not be able to reliably claim if they are using the wrong trust. One such example of a tax benefit, is the negative gearing tax benefit.

Did you know  that Chan & Naylor has the only ATO approved method of claiming negative gearing as a tax deduction? Our Property Investor Trust® is the only Privately Held Trust in Australia that has an ATO Product Ruling (PR2014-15) - which stipulates that should clients use the Property Investor Trust® in the prescribed way by Chan & Naylor, they would have certainty of claiming the negative gearing expenses against their personal income/wages. No other type of Trust or Accounting firm can offer clients this kind of ATO backed certainty.
ATO Product Ruling Approval

 

Furthermore, a major disadvantage that many Trusts and Structures have is the fact that they don’t have the adequate asset protection measures to protect wealth within the family (of blood relation only). Ask yourself this question: what would likely happen to the inheritance you leave your children, if they are subject to family breakdown or get personally sued etc? Do you really want your hard earned wealth lost within the next generation, or potentially allow current or future unscrupulous in-laws from getting control of your family estate?

When buying assets, such as property in a Trust, it is important that the investment vehicle you use, that it would give you reliable asset protection for future generations and protect assets within the family.

For property investors and business owners, Chan & Naylor’s asset protection specialists has developed and built specific lineage clauses into property specific and business specific trusts, that stipulates only the relatives (of blood relation only) of the original trustees are eligible beneficiaries or future appointment as trustees. This means, that with the asset protection specialists at Chan & Naylor, you can rest assured knowing that only your lineage (not your in-laws) are the only ones entitled to benefit from your accumulated wealth.

Another major disadvantage that many people don’t realise they get when they use a typical Trust or Structure, is the fact all trusts expire after 80 years. Many Trusts have a use by date (called a ‘Vesting Date’) and many people are dangerously unaware of this fact.

When a typical Trust expires it would automatically pass the assets down to the nominated beneficiaries. In such an event, the transfer of assets would trigger Capital Gains Tax and Stamp Duty. This is a nightmare for long term property investors. Just think about the huge tax bill you will leave the next generation, in terms of capital gains and stamp duty. They will be forced to pay those enormous taxes just to retain the accumulated wealth within the family estate.

There has to be a better way…fortunately, there is.

What makes Chan & Naylor the leading asset protection specialists in Australia is the fact that our proprietary Trusts and Investment Structures, does not have an expiry date. Therefore, you and your family can have tax effective asset protection and wealth creation for generations to come.

 

Trust the Asset Protection Specialists across Australia in Sydney, Melbourne, Brisbane, Adelaide, Perth. Get better asset protection with Chan & Naylor.

 

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