Top 10 Asset Protection Strategies

1. Ensure that non-business assets (particularly real estate are held by an individual or entity which is not exposed to business related risks. Hold valuable business assets such as trademarks, patents and equipment in a separate entity from the trading entity and grant a usage licence to the business entity - this will also provide some opportunity for tax planning.
   
   

2. Secure inter-group or shareholder loans so that they have priority over unsecured creditors. If the bank has security over personal assets, consider also giving it security over business assets - this will give the bank priority over business assets and, potentially, reduce the bank's reliance on security over personal assets.
   
   

3. Create personal wealth in a superannuation fund - statutory protection is afforded to assets in superannuation funds up to a prescribed limit.
   
   

4. Ensure that documentation is in place to remove high risk individuals from key positions (such as director/shareholder of companies and appointer of discretionary trusts) in the event of them being sued personally.
   
   

5. Avoid, wherever possible, the giving of personal guarantees.
   
   

6. Ensure that effective insurance is in place and maintained to cover all business risks. Consider directors and officers insurance to cover you for liability you incur as a result of your office.
   
   

7. Know your obligations under important business contracts (such as the lease, bank security documents and trading agreements such as distribution, supply, agency and franchise agreements).
   
   

8. Be aware of the laws that make you personally liable if your company breaches them.
   
   

9. Have your company give you an indemnity for any liability you incur as a result of your office (particularly if you are not a shareholder of the company).
   
   

10. Attend management meetings of the company and resign from office immediately if you suspect any wrongdoing by the company.

Author Credits