All Topics / Help Needed! / How to protect current assets when not set up in a trust structure?

Viewing 10 posts - 1 through 10 (of 10 total)
  • Profile photo of MandyMandy
    Participant
    @mandyw72
    Join Date: 2015
    Post Count: 6

    Hi

    We are really excited to have found and joined this group!

    Having recently attended a property investment seminar we are concerned that our current assets (1x PPR and 1x IP) are not well protected as we have not structured them in a Trust/Company set up. The presenter said not to go and change them now, but didn’t give any hints about how to protect them in other ways. We are going to enlist the services of a good accountant-starting with some of the recommendations found on this forum-can we assume that our accountant should advise us about other ways?

    In addition, any thoughts around the better insurance companies to deal with for value for money and service? Ones that will cover uninvited guests etc? I am in the process of overhauling our policies so any advice would be greatly appreciated. Currently we have house/contents and two vehicles with Coles and our IP with Suncorp.

    Thanks in advance,
    Mandy

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hey Mandy

    Not using a trust isn’t the end of the world – in fact, it’s not even that common these days. The vast majority of my clients don’t use them – I’ve never personally done so either.

    As for risk mitigation – make sure you’ve got some good insurances in place (as you’re already aware).

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Asset protection involves legal advice so best to seek a lawyer. You need to carefully consider the bankruptcy act and the conveyancing act in your state. One way to gain extra protection is through related party loans with registered mortgages. But this has to be done in a commercial manner of the result will be like a wet paper bag!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Hey Mandy

    Not using a trust isn’t the end of the world – in fact, it’s not even that common these days. The vast majority of my clients don’t use them – I’ve never personally done so either.

    As for risk mitigation – make sure you’ve got some good insurances in place (as you’re already aware).

    Cheers

    Jamie

    <i class=”rw-ui-like-icon”></i>0<i class=”rw-ui-dislike-icon”></i>0

    <i class=”rw-ui-info-nub rw-ui-info-outer-nub” style=”border-right-color: rgba(153, 153, 153, 0.498039);”></i><i class=”rw-ui-info-nub rw-ui-info-inner-nub” style=”border-right-color: rgb(255, 255, 255);”></i>Rate this

    I can say the same about the clients I see – a minority are using trusts and when they are it’s primarily for tax than asset protection.

    Consider the possibility of litigation against yourself when you hear people spruiking constantly about asset protection. There’s a very different risk metric for a surgeon vs a public sector customer service officer!

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of superAndrewsuperAndrew
    Participant
    @superandrew
    Join Date: 2014
    Post Count: 188

    For 1x PPR and 1x IP a Trust/Company is overkill. As you get more properties you can consider a trust for tax reasons as Corey mentioned.

    It also depends on your profession and whether there is a high chance for you to get sued.

    Andrew

    superAndrew | Property Analyser and Finder Tool
    https://property-analyser.com.au

    Profile photo of MandyMandy
    Participant
    @mandyw72
    Join Date: 2015
    Post Count: 6

    Hi Jamie,

    Thank you for your comment. In your experience is there a particular insurance company that many investors tend to use? Or is it pretty random?

    Thanks again
    Mandy

    Profile photo of MandyMandy
    Participant
    @mandyw72
    Join Date: 2015
    Post Count: 6

    Thank you for your advice Terry.

    Mandy

    Profile photo of MandyMandy
    Participant
    @mandyw72
    Join Date: 2015
    Post Count: 6

    Hmmmm that’s the thing Corey, although I’m not a surgeon I am in the health profession. I would imagine with being employed by QLD Health I’m covered by their insurance and I am also a member of the union which includes indemnity as well.

    It was more for the ‘un-invited guest’ type scenarios that can result in someone losing everything that I was referring to.

    Thanks for your input

    Mandy

    Profile photo of MandyMandy
    Participant
    @mandyw72
    Join Date: 2015
    Post Count: 6

    Hi Andrew,

    Yes overkill at this stage, but we have a five year plan to become financially independent through property investment, are very motivated and plan to buy at least one more property by the year’s end. Just wanting to make sure we are going about things the most sensible way really.

    Thanks for your input.

    Mandy

    • This reply was modified 4 years, 11 months ago by Profile photo of Mandy Mandy.
    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I advise on on asset protection and trusts etc, but I generally try to talk people out of using trusts to own property. Probably less than 10% of my clients use them to own property. Asset protection (on bankruptcy) is generally not an issue for most people, even doctors. I have yet to see a doctor sued for negligence and in most cases their insurance would cover it – and their employer because of vicarious liability.

    But the main reason you should consider asset protection is for business. If you enter a business at some stage in the future then your previously purchased assets will be at risk. Many businesses fail and even if you are using a company structure to limit liability the directors usually need to give personal guarantees. If you think you might get into property development then this is probably more risky that the average business.

    So generally speaking it is a good idea to buy assets such as the main residence in the name of spouse A – who is least likely to enter a business or be sued. Investments could also be done in the name of spouse A while spouse B conducts the risky business through a company structure. Once land tax thresholds of spouse A have been used up then perhaps consider a trust to own investment properties.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

Viewing 10 posts - 1 through 10 (of 10 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.