Best method for Asset protection

Here is a link to something I wrote explaining ‘all monies’ clauses. https://www.propertyinvesting.com/topic/5025757-what-is-an-all-monies-clause/

Yes it is possible. Most discretionary trusts would name a person and then say ‘all children, grandchild’ of the above.

Hi @terryw, you mentioned that you have read Dymphna’s book on asset protection and that it has many holes in it and that you couldn’t recommend it. What specifically is erroneous about the information she shares? I read Dymphna’s book and it seemed to be a good introductory guide for the layman but I admit I am inexperienced in this area. I’m new to investing (recently purchased PPR and in the process of purchasing first IP) and want to set up a trust structure for asset protection that I can replicate/build on as I continue to build a property portfolio but I am finding the myriad of perspectives and opinions online and on forums confusing. I talked to an accountant about setting up a trust structure for my first IP and he told me that I shouldn’t set one up until I have bought 2 or 3 IP’s to show that I am serious. That didn’t make much sense to me as I’m aware that you can’t retrospectively restructure properties from personal names into trusts easily or effectively. Would you recommend buying 2-3 IP’s before considering trust structures as I have been advised? I have appreciated your comments and feedback on other forums and your tips on your profile and would appreciate further clarity on these two questions I have raised. Thanks!

If you have any specific asset protection questions ask away, but I can’t really answer ‘should I’ type questions with something other then ‘it depends’ because it really does depend.

example.
Should I use a trust to buy property in NSW?

This will depend on
– if it is negatively geared
– you have used up your land tax threshold already
– if you are concerned about asset protection
– if you understand the implications on death
– on your family situation
– on your financial situation

For example if you are a business owner and need to give perosnal guarantees for leases etc then you may be at risk of being sued. You now have to consider whether you are willing to pay an extra 1.6% pa in land tax to gain some asset protection. On a $400,000 land value property this would equate to $6,400 per year in land tax which you would not otherwise have. Is asset protection worth paying $6,400 per year for the next 40 years or so?

If not, then there are other options – a company with shares owned by the trustee of a discretionary trust.
Alternatively a property owned by your spouse.
or owned by yourself with a mortgage to a discretionary trust

If you are buying in QLD the same issues don’t arise because a trust gets a separate land tax threshold.

Once you have determined the ownership structure you need to determine the structure of the structure – terms of the trust, who plays what role, planning for death, bankruptcy, insolvency and family law disputes. If a company is involved then you need to determine the structure of hte company.

Once that is done then you need to understand how to fund it – gift or loan the deposit in. Who should be the giftor/lender and who to dcocument this

etc

etc

Hi Terry,

Have you read the book “Family Trusts – A plain English guide for Australia Families” by N.E. Renton and Rod Caldwell?

If so, would this book be any use for protecting assets in a trust?

I would like to sit down with someone in Melbourne to advise and set up a structure for me. Do you have any recommendations for someone to help me in Melbourne?

Many thanks

Terryw wrote:

An unregistered mortgage isn’t indefeasible as it is unregistered. Lodging a caveat doesn’t register it, the caveat just notifies others there is an unregistered interest. It may give priority over other non registered interests though. To make the mortgage stronger it should be registered.

Hi Terry,
Just following up an older topic here and hope you are able to clarify and help.

Regarding your comment above, what is the process and logistics of registering such a mortgage
when there isn’t any real money involved, but merely the equity of a property?

Also, will the first mortgagee deny such registration?

Thanks,
FXD

Thanks Terry.

So does this basically mean it’s not an asset protection at all?
I am wondering why so many experts out there still advocating that this method
is a sound asset protection, or may be I am just not getting my head around it.

Rgds,
FXD

Terryw wrote:

fxdaemon wrote:

Thanks Terry.
So does this basically mean it’s not an asset protection at all?
I am wondering why so many experts out there still advocating that this method
is a sound asset protection, or may be I am just not getting my head around it.
Rgds,
FXD

Before I answer
What exactly are you referring to?

Terry,
I am referring to your previous comment on registering a legal mortgage does not make that an asset
protection. Or have I misunderstood what you said?

Thanks,
FXD

Terryw wrote:

I am wondering why so many experts out there still advocating that this method
is a sound asset protection,

Are they experts?

If they are not lawyers then they have no business advising this. If they are lawyers then they should be able to present their arguments on why it does provide asset protection.