One of the key things people ask is about asset protection. When you run a business you have different levels of risk.
Different levels of risk = different levels of asset protection
What is the worst that can happen to an accountant?
Someone gets a paper cut at work. If you’re a heart surgeon, you could kill somebody.
Different levels of risk require different levels of asset protection.
We are going to go through some key ways to protect some of your assets.
The first way to keep your assets clear is to have them in other people’s names. That sounds great, doesn’t it? But do you trust a family member to own your house? Do you trust a best mate to own one of your investment properties?
The answer is probably no. If you don’t have something in your name and you don’t have a legal title to it, then nobody can take it from you.
We just talked about other people’s names. You can have assets in your spouse’s name. I’m not going to get into it, because I’m not a family lawyer. But there are rules and regulations in the family law court about assets and splitting them up. If my house is in my wife’s name and I get sued personally, they cannot go after my house.
There are exemptions for stamp duty. When we sell an asset, we have to pay stamp duty. If you transfer your house from yourself to your spouse, there are privileges which can reduce the amount of stamp duty you pay to zero.
Sep up a trust
I could spend 20 minutes on this topic alone (trust), maybe even two hours. A trust is a construct, it’s a legal entity which can sue and be sued. And you can get the benefit of that. It’s an option, check it out in more detail.
Have a rock solid insurance plan
A good strategy doesn’t just mean moving stuff in people’s names, it also means insurance. It has a look at your risk level or your potential liability, an action which I will go on about.
A good risk management strategy doesn’t just include moving assets and it doesn’t just include insurance. But insurance plays a key part into this world.
You need to have a look at what your risks are and you need to put in measures which are going to mitigate or reduce those risks.
Evenly spread out your risks among your different asset areas.