The top eight asset protection myths

Think asset protection doesn't apply to you? Think again. If you own assets in your name, your definitely at risk.

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Myth No. 1: Asset protection is only for the rich

Answer: False

Consider this scenario: If you held a net worth of $5 million, you would not be as affected by a $1 million lawsuit as someone else holding a net worth of just $1 million. The wealthier you are, the easier it is to pay the judgement and carry on with life. Those with fewer assets could potentially lose everything, with bankruptcy the only way out.

Myth No. 2: I’m not a lawsuit target because I don’t own a business

Answer: False

NSW is the third most litigious state in the world. Litigation is becoming a new favourite pastime because it’s easier to sue someone and win money than it is to earn it. No one is safe.

The only prerequisite for being a litigation target is owning assets of value to someone else. Those assets could include a family home, investments, money in your bank account, or your business.

Myth No. 3: I don’t need asset protection because I have insurance

Answer: False

You cannot buy insurance as a hedge against every possible scenario.

There are limits to your coverage. For example, you may hold professional liability insurance to protect your assets from lawsuits relating to your business activities. However, that insurance will not help you in the event that you were sued due to someone being hurt in a car accident that was deemed your fault.

Myth No. 4: If you’re sued and don’t have asset protection, you can transfer
your assets to a family member

Answer: False

Transferring all of your assets to your spouse and/or children, especially after something has happened, will not protect those assets from being seized in a lawsuit. The courts will simply follow the paper trail and consider your family member a party holding those assets in trust for you.

Myth No. 5: I don’t have enough assets now, so I’m safe to look
into asset protection later

Answer: False

The time to set-up the basics for protecting your assets is right now. If you transfer your assets into an asset protection structure down the road and your assets have grown significantly in value, you may become liable for costly capital gains taxes and stamp duty.

Myth No. 6: Asset protection will cost me a fortune to implement

Answer: False

Setting up an asset protection structure is relatively inexpensive. What’s more expensive are the legal fees associated with defending yourself in court. To make matters worse, in the event you fall victim to a lawsuit, you lose not only financially but also psychologically.

Myth No. 7: I have a Proprietary Limited Company, so my assets are secure

Answer: False

Owning your business in a Pty Ltd company makes you a sitting duck for litigation. Why?
Because companies are owned by shareholders.

So if you’re sued personally, everything you own in your name is up for grabs including your company shares. This puts your entire business at risk.

Myth No. 8: Asset protection is about hiding your assets

Answer: False

Asset protection planning should be based on the presumption that all of your planning, its purpose, and those assets will eventually be known to creditors. This is because, one way or another, it usually is. Asset protection provides the assurance that you don’t have to hide a thing.

Learn more about trusts and asset protection

Schedule a time to talk to a Tax Effective Trust and Asset Protection Specialist who can help you:
  • Better understand all of your personal and business risks.
  • Safeguard your personal and business assets from lawsuits and creditors.
  • Create agreements that protect your personal assets from family breakdowns, business partners, and their estate.
  • Legally reduce taxes by distributing income to beneficiaries and bucket companies at lower tax rates.
  • Pass your assets to future generations without any tax or stamp duty consequences.
  • Discourage creditors and legal opponents from pursuing you, your business, and any assets passed down to future generations.
Don’t wait until it’s too late. Contact us, today.

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