Asset Protection Planning
Asset protection planning is preparing and documenting professional advice to enable you to protect your personal and business assets as much as is posisble under the current law in Australia.
This means identifying all that you can to protect your assets from creditors, from public and professional liability, from relationship breakdown and from unforeseen relationships and influence on estate beneficiaries (where an estate is involved). Asset protection then involves establishing those financial and legal arrangements identified and outlined in the professional advice in detail - so as to mitigate as much as possible the negative impact and possibility of a successful lawsuit by creditors, public, consumers / clients current and past (including retirement and estate assets) so that your assets are a safe as possible.
This is an emerging area of concern for business people in Australia. The basic reason for the high profile and the growth of work in this area are:
- The substantial increase in bankruptcy rates in Australia and overseas countries whose trends lead Australia’s
- The recent review of bankruptcy legislation to increase clawback opportunities of administrators and courts (2006)
- Increasing ease with which credit is available
- Increased legal rights of de-facto partners
- Increased competition in ‘domestic’ as well as ‘export’ business as reducing trade barriers and technology impact
- Current economic circumstances making businesses vulnerable in their abuility to deliver on obligations previously entered into
- Failure of HIH in early part of the decade and subsequent failure of a number of financial institutions world wide - and the resulting recognition by the public of the risks that professional and public liability insurers may not be able to pay claims or will seek to not pay claims or take an adversarial approach with their policy holders
- Increasingly litigious culture in Australian business
- Increasing layers and complexities of laws and regulations impacting on businesses creating a myriad of legal duties and responsibilities
There are a number of specific industries which have legislation and regulation that particularly targets them for increased levels of responsibility and liability above the background / general environment of increasing legal duties. These include:
- Builders
- Real estate agents
- Health professionals, such as pharmacists, general practitioners and specialist physicians
The bottom line on an asset protection plan is that every business needs one. Without an asset protection plan it is likely that a business will over the course of its lifespan be the subject of losses arising from claimants of some sort or another. Most business people understand this, unfortunately most business people do very little about it, relying on their accountants to provide the necessary protection.
Without specific consultation in the area it is unlikely your affairs are organised from an asset protection perspective. Your assets are exposed at the weakest link in your business and personal financial arrangements.
Because asset protection planning is so specific to a business and the owners’ needs and situation, most online resources and references - which are, of necessity, general in their scope and application - can be misleading to general readers. Accordingly, professional guidance should be sought for your asset protection planning needs.
Nevertheless we have provided a host of resources here to give you some background about the issues that may be relevant to your businesses needs. Of course these are references only and we advise you not to use these without seeking the professional guidance of a qualified legal, accounting or Certified Financial Planning professional experienced and accredited in this specific area. Your generalist accountant / lawyer / financial planner may not be able to assist you beyond first principles.
This service is available via ascendia wealth pty ltd.
Selected General Resources:
There are a number of relatively recent changes in legislation that in its various ways impacts on the capacity of individuals to ‘protect their assets’. Asset protection methods used and asset protection plan made and implemented even 18 months ago will need to be reviewed. The changes in their combined impact are substantial and your asset protection plan may as a result be in tatters – you may have no protection and no effective plan now.
The discussion in the resources selected below is a brief general summary of the changes, to assist you to consider whether you should get up to date professional advice in regards to your asset protection plan.
Rough Guide – Changes in Asset Protection Law
Selected Technical References:
Please follow this link for a page of references illusterating some of the major legal issues involved in asset protection planning