Building family wealth takes a lifetime. Losing it can take a single claim. We are accredited advisers with the Succession, Asset Protection & Estate Planning Advisers Association.
It is not unheard of for a $1 million estate to be challenged, and when that happens you can expect upward of $200,000 in legal fees and years of litigation. The bigger the estate, the larger the fees.
Anyone with a business or a profession is exposed — from a doctor advising patients, to a property developer with their latest project, to a tradesperson on a job site. There are five ways family wealth comes under attack, and each one is a time bomb sitting under a family's wealth and health.
Employees, children, spouses, neighbours, tenants, councils and regulators can all sue you, and there is no shortage of no-win-no-fee lawyers ready to take the case. Australia's legal industry earns more than $23 billion a year.
Exposed: everything held in your own name. The biggest threat isn't the litigation itself — it's the years in the system, the stress and the escalating fees.
A person who suffers mental incapacity cannot act as a trustee or company director. A single medical event can put someone out of action for a long time. If they are the sole director, or the director of a trustee company for a discretionary trust or an SMSF — who runs the show?
Exposed: businesses, investments, trusts and super funds where a key person becomes incapacitated without a plan already in place.
Economic shocks hit income and business strength, and insolvency practitioners report significant upticks in their work at exactly those times. It is heartbreaking to watch family businesses go to the wall with no protection in place.
Exposed: assets, investments, companies, trusts and even super funds where a key person, director or trustee is facing insolvency.
Most people with a will expect their home, investments and super to be distributed according to that will. Not necessarily. Every Australian state allows a disaffected person to claim against an estate, and a successful claim overrides the will.
A real case: in 2018 a WA Supreme Court judge castigated lawyers who had spent five years and $500,000 in legal fees challenging a $600,000 estate consisting only of the deceased's home.
A de facto relationship of two years gives both parties full recourse against the other's property under the Family Law Act. Gifts to adult children, help with a property purchase, or an unpaid present entitlement in a family trust can all add fuel to a relationship breakdown.
Exposed: the Family Court has power to split assets, investments, companies, trusts and super funds. The old strategy of putting assets in a spouse's name can be a disaster from a family law perspective.
Each of these five risks attacks the same weak point: assets held personally, in your own name, with the net equity fully exposed.
The strategies that address this are well established and entirely legitimate. They simply have to be put in place before a problem arises — not after. Once a claim, a diagnosis or a separation has occurred, the options narrow sharply.
The strategy we use is built around a Family Protection Trust. In broad terms, it works in six steps.
A special-purpose trust is established for the beneficiaries in your lineage or bloodline, including you and your spouse. The key role is not the trustee but the Family Protection Appointor, who controls who benefits and who acts as trustee.
We value the assets and deduct what is owing to arrive at your net equity. The tax system rewards holding your home and some investments personally — so we work out what can be protected without triggering tax consequences.
The net equity is gifted to the trust using a promissory note — a legal IOU. Legal ownership of the assets does not change and nothing is transferred, but personal net wealth is reduced to a very low number. This is where the real protection comes from.
The trustee lends the corresponding value back to the legal owners, so you keep using your home and assets exactly as before. It works the same way a bank loan does.
Just like a bank, the trustee secures the loan by registering a mortgage over real estate — a second mortgage where a bank already holds first rights. Shares, vehicles, collectibles and other personal property are secured via the Personal Property Securities Register.
As assets grow in value, a call option agreement lets future increases in value accrue to the trustee rather than sitting exposed in your personal name.
We hold accreditation with SAPEPAA — the Succession, Asset Protection & Estate Planning Advisers Association — the Australian body responsible for accrediting advisers in this field. Very few Sunshine Coast accounting practices hold it.
Asset protection sits at the intersection of accounting, tax and law, and no single profession covers all of it. As your accountants and registered tax agents we handle the valuation, structuring and tax analysis, and coordinate the specialist lawyers who draft the trust deeds, mortgages and option agreements, and the specialists who register PPSR interests on the trustee's behalf. You deal with us; we manage the moving parts.
Sunshine Coast business owners and professionals with personal exposure to their work; families with a home, investment properties or a share portfolio held in personal names; blended families where a will alone may not deliver the intended outcome; and anyone with an SMSF or trust where a sole director or trustee is a single point of failure. As the guide we give clients puts it — who could not benefit from a wealth protection solution in place, even if it is only for the family home?
Have a confidential conversation about what you have built and how exposed it currently is. We meet clients across the Sunshine Coast and will tell you honestly whether a protection strategy is worth pursuing in your situation.
Talk to an accredited adviser