Asset Protection. Asset Protection What Is It?

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1 STEP 1E FACT SHEET 1 Asset Protection Asset Protection What Is It? Asset protection (sometimes also referred to as debtor-creditor law) is a set of legal techniques and a body of statutory and common law dealing with protecting assets of individuals and business entities from civil money judgments (ie. law suits). Asset protection is one component of your overall investment structure. If you own any property assets, that are in your personal name, without any asset protection systems in place, you are totally exposed to creditors. Legally, asset protection is not mandatory however many people have it in place to protect their assets. It is not exclusive to just wealthier people. We live in an age where it seems everyone sues everyone. Whilst that may be slightly exaggerated, it s not too far off what people actually sue for these days. Oh that person caused me emotional distress - you get the drift! For some people, law suits are their wealth creation strategy alone. STEP 1E ASSET PROTECTION 1 OF 7

2 Property (and the equity you have in your property) is one of those asset classes that is an attractive target for any pending law suits. It s the first thing lawyers swoop upon. Unfortunately, your ability to dispose of a property quickly, is not something that can easily be done nor is feasible to do. This in turn, exposes you to risk. It is therefore important to always remain in control of your assets through clever asset protection, namely the set-up of a trust. The success or failure of an asset protection system depends on 2 things intent and timing. If a person sets up the trust mechanism at a time when he / she is not under financial distress and the intention of the set-up was for wealth preservation, it will stand up in court. Conversely, if the system is set up at a time when the person is under financial pressure or a possible law suit is looming, then the system is likely to fail. Asset protection can be a minefield. A vast array of trusts exists with the intent of protecting your assets. Some of these trusts though, are over engineered, weave through legal loophole, hamper your ability to get finance, increase your tax liabilities and so on. Some trusts are very good. Different types of trusts, do different things. You only need to set up an asset protection system once to cover all your existing and future property assets. It s a legal cost of being a property investor. Asset protection tends to be a very serious side of renovating however is a critical knowledge point which most people (who haven t invested in their own education) tend to overlook. STEP 1E ASSET PROTECTION 2 OF 7

3 Purpose Of Your Asset Protection System To instantly protect all of your wealth, past, present and future without incurring stamp duty, tax or any changeover costs. To provide flexible protection for any situation, property and exit strategy which will not adversely affect your tax structuring and borrowing requirements. To gain instant protection for all assets and wealth (not just property) without the need to keep setting up new structuring every time you buy a new property. Your trust should therefore be a one-stop shop to cover all your future dealings. Provides protection without any taxation ramifications. Your current tax situation will not change and this structuring will create no further tax implications for you. Quick, easy and invisible protection which can be effected retrospectively over past assets, even if they are owned in your own name, without incurring stamp duty. STEP 1E ASSET PROTECTION 3 OF 7

4 What Is The Right Structure When It Comes To Buying Your Property? In the property business, we have three competing considerations to balance out when it comes to buying. These are: Unfortunately, these factors don t always align perfectly for every property deal you undertake. For example, your accountant may tell you that you need to buy your property in a trust to minimise your income tax. Your lawyer may tell you to use a company to protect yourself. Your finance person may tell you to buy a property under your own personal name because your ability to get finance will be easier. And there lies the conundrum, which do we favour tax minimisation, asset protection or finance flexibility? Is any one of these three, more important than the other? Whilst asset protection is definitely not a one size fits all proposition, there are factors that all property entrepreneurs will have in common. The most flexible solution is to have one structure to cover all of your asset protection needs so you can then prioritise tax and borrowing requirements. At the end of the day, tax considerations will be paramount and it is a big world out there when it comes to borrowing so you can shop around for a lender to suit. The purpose of this module is not to extensively cover all the in s and out s of trusts. Its purpose is to raise awareness that asset protection is an essential step for anyone investing in property. STEP 1E ASSET PROTECTION 4 OF 7

5 Rules O f W lþy They get money working hard for them by maximising their financial structure. They consolidate all debt and implement strategies to release cash flow and reduce bad debt quickly. They invest additional cash flow to purchase tax effective investments. They use the equity in those investments to purchase more investments. They achieve financial freedom and are in control of their lives. STEP 1E ASSET PROTECTION 5 OF 7

6 Master Wealth Control System By Dominique Grubisa Renovating For Profit endorse the Master Wealth Control System by Dominique Grubisa. Dominique is considered to be one of Australia s top debt and asset protection barristers. Dominique s specialty is the Vestey Trust which is considered the ultimate asset protection solution. Dominique s Vestey Trust System is inclusive of all trust set-up, legal fees & GST. The fee also covers additional properties you add to your portfolio, at any point in the future. To commence the process of setting up your Master Wealth Control Asset Protection System, register at or phone (02) quoting code RFPSTUDENT in order to receive your reduced price of $6,500 (normally $7,500). On enrolment, you ll receive (via ), a detailed information pack explaining how the system works, forms to complete and so on. You will work with Dominique s in-house team of legal experts (all inclusive of your enrolment fee) to get your assets fully protected, moving forward. Please note that Dominique s system is not a seminar / workshop / home study kit type of program. It is a legal structuring service and a lot more. You are under no pressure to enrol. We encourage you to speak to your current accountant about this type of trust, before making your decision, but please be aware that many accountants are likely to lack knowledge on this type of trust also. Please do your own research to ensure you feel comfortable with this legal structuring system. STEP 1E ASSET PROTECTION 6 OF 7

7 When Should You Set This Up? If you decide not to invest in Dominique s asset protection system, that s OK. I ve done my job in bringing awareness to you on the topic. I often get asked, at what point should someone set up their asset protection system? Should you do it before you own any assets, when you have a little bit of equity or millions in assets? Certainly not the latter. If you have no to low equity, I d say don t rush out and set up your asset protection system just yet, especially if investing this money will mean you can t do you first property deal. Technically speaking, the best time to set up your asset protection system is when you buy your first property, however if you have limited equity in that property, you could take the risk and not set up this immediately. You could wait a little and once you build to $100,000 or more in equity, you d be foolish not to seriously think about protecting yourself. Try to avoid cross collaterising your properties with your finance company. Try to avoid cross collaterising your properties with your finance company. This may not always be possible, especially when you re first starting out and building your equity. If you don t cross collaterise your properties, you won t have to lift the caveats (under Dominique s system) off the property being used as security. In the event that you have to cross collaterise properties, it s not the end of the world. It just means 2 caveats will need to be taken out, not 1. Disclosure Renovating For Profit receives a commission payment from your use of Dominique Grubisa s service. Renovating For Profit re-invests this payment back into our business, as a means of staying in business, reducing operational costs and being able to service you now and into the future. The receipt of a commission payment by no way influences RFP s recommendation of Dominque s services. It is important to note that Cherie Barber has all her assets protected under Dominique s system and therefore personally recommends it, regardless of whether a commission payment existed or not. STEP 1E ASSET PROTECTION 7 OF 7