While these strategies certainly do fall under the heading of asset protection, there are simpler and more meaningful strategies that need to be considered for every situation – both business and personal.
What is asset protection?
Asset protection is the process of protecting the wealth you have created and the assets you have accumulated. This can range from items as large as your business right down to your car and home contents.
It covers strategies including protection from bankruptcy, but it also covers things such as having the right insurances in place and even having a valid will.
Common asset protection strategies
Asset protection starts with your personal affairs.
Insurance – protecting your house, car, contents and the most important asset: you. Income protection, trauma and life insurance protect your income stream as well provide lump sums should an event happen that you leaves permanently disabled. These lump sums will allow debt to be repaid so you don’t find yourself in a position of having to sell your family home.
Will – Do you and your spouse have a valid will? Without a valid will, your assets will be dealt with by the Public Trustee in the event of your death. Both time delays and the fees associated with administering your estate can see your wealth eroded, sometimes leaving very little to your family. They will also be without access to the money or property until the estate is properly dealt with, which could take months or in some cases, years.
Legal Agreements – Shareholder’s agreements, employment contracts with staff, contracts with key customers and suppliers are examples of legal documents that will help protect you in business should the relationship sour. These agreements will also help you if the ATO come knocking as they prove the validity of transactions recorded.
Intellectual Property – Ensuring you have registered your intellectual property rights including trademarks, patents and business names are all examples of simple steps to protect your rights to one of your key business assets – your identity. This can also include setting up things like your Facebook, Twitter and YouTube pages with your business name, and registering your domain name so that your business is the first found on the internet when people go searching for it.
Register of Records – Quite often one person in a domestic relationship will make the majority of the decisions in relation to banking and the household finances, and things like insurances, loans etc. It is very important that both parties know where any relevant information is kept so that in the case of an unfortunate event, it can be located quickly and easily and the household can continue to run efficiently. Other details like internet banking login details and passwords also can be vital pieces of information to pass on – but remember to store these details securely!!
As the above points show, asset protection is not just a process for the ultra rich – it is a vital strategy for everyone to protect their hard earned wealth.