The issue of asset protection often doesn’t materialise until it’s too late, however the current COVID-19 crisis should serve as a reminder that all those who personally own a business, are company directors, or even those in professional services should take legitimate steps to protect their assets.
Much like when Kerry Packer told everyone who doesn’t take steps to minimise their tax obligations that “they need their heads read”, those who don’t take simple steps to protect their assets may find them themselves facing financial ruin for both themselves and their family.
When done right, asset protection is a legal, relatively straight forward and in most cases cost effective way of putting measures in place to protect your personal assets such as your family home.
The last thing you need to think about at the moment is whether or not creditors are going to be pursuing you via a personal guarantee thereby putting your family home on the line.
The key things to consider in terms of protecting your assets are:
An accountant may be able to assist, but a lawyer is able to advise on the legal implications of your chosen structure and whether it will provide you with the protection you need, in addition to any tax savings that may apply.
Given that it takes anywhere from four to ten years (from the date of the transfer) for the protection being secure from any claw back provisions by a liquidator or a trustee in bankruptcy, you should act now to ensure you’re not caught out in the future. Remember, prior to COVID-19 we had the GFC. If you’d taken steps after the GFC, you would be in a much better position to weather this current storm.
For details of all our COVID-19 tips and updates, visit the Gadens COVID-19 Hub.
Rob Hinton, Partner
Cassie O’Bryan, Senior Associate