What Is Asset Protection

If you are in business, then you are at risk. Thus, we say: Business = Risk.
Asset protection is all about minimizing the exposure to that risk.
So what is the risk? It is the risk of losing assets. In order to lose those assets, a taxpayer must first be successfully sued, by creditor, bank or other third party.
Thus, the first step in asset protection is to minimize the risk of being sued.

For someone in business for example, this may mean implementing systems to minimize risk and create a safer environment in your workplace. After all, prevention is often better than a cure.

Another aspect of asset protection is minimizing the risk of loss of assets in the event a lawsuit is successful against you. One such method is to have appropriate and adequate insurance protection. Another, and this is our favourite, is to ensure that your assets are out of reach of predators. This may involve the taxpayer divesting themselves of your assets, or better still, try never owning them in the first place.

There are many ways in which taxpayers can minimize risk and their exposure to risk. All of these are forms of asset protection.

So what is the best asset protection mechanism?

Remembering that Business = Risk, the best asset protection is achieved by having a number of layers of protection. For example:

• First layer - to ensure risk of liability is minimized by keeping up to date, seeking expert advice when required, taking care when providing advice, maintaining quality of manufacture with minimum defaults, etc
  
• Second layer - maintaining adequate insurance cover.
  
• Third layer - and perhaps the most important, own little or no assets.

Asset protection encompasses the protection of all of the taxpayer's assets, including the business assets, personal assets and superannuation money. It should cover circumstances
such as death and divorce, (succession circumstances).

Any structure needs to mindful of Bankruptcy laws and creditor claw back. We and Refocus will guide you through these layers and point out the safest way you can protect
your business and personal assets. This may involve the establishment of Discretionary Trusts to hold assets and a company to operate the business, which generally enjoys a lower tax rate. Assets should always be separated from ones liabilities or areas of risk.