Asset protection is a key consideration when acquiring, structuring and maintaining your assets to ensure that your hard-earned assets are protected as much as possible from creditors.
Unfortunately, there is often a lack of proactive advice surrounding acquisitions, legislative changes and changes in your state of affairs which means that your assets may be subject to a higher-level of exposure than what is needed.
Continue reading to find out why you should obtain advice on best protection strategies following the landmark case Commissioner of Taxation v Bosanac – (2021) (FCAFC 158).
Landmark Case and How it May Affect You
In recent developments, the Full Federal Court of Australia passed judgement on a taxpayer surrounding their primary residence held in his wife’s name for asset protection. In this instance, the Court held that there was a presumption of trust/ he had an equitable interest in the property despite not having title and therefore creditors attacked the equity of their primary residence.
Prior to this case, it was often thought that in de facto relationships you would structure operations in a way to have an “asset accumulator” in the relationship and a “risk-taker” in the relationship and this would ultimately protect your assets. i.e. Wife has primary residence, company shares etc in her name, Husband is the director on companies and bares the risk.
Unfortunately with this case now being a precedent for future cases that may arise, it stresses the need for individuals and families to express their intention by way of formal documentation.
The Potential Solutions to Consider
In-light of the recent developments, there are still things you can do to ensure that your asset protection is maintained. The course of action will be dependent on your particular situation.
- Legal documents established at the start of a property acquisition, or during which states your intention for contributions made into this property over the years (presumption of advancement).
- Gift and loan back strategies whereby the equity in the property is gifted onto a trust and the trust subsequently loans back the money to the individuals as a second mortgagee.
How Your Accountant Can Help?
The Crest Accountants team work by reviewing your current and/or potential risks and implementing an asset protection strategy specifically designed to mitigate or manage those risks.
Contact Crest Accountants to gain peace of mind today.
Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice.
