Welcome back to another thought provoking episode of The Business Owners Podcast. This episode we revisit Wayne and Gino on their (separate) asset protection journeys.
First, we talk trusts; how they work and how they can be used to protect your assets.
Although trusts can be a great way to insulate assets from creditor claims (from both in and outside the family) trust structures are not ‘one size fits all’.
When setting up a trust, you will need to think about the potential risks unique to your family and business circumstances and think about who you want to have ultimate control over your assets.
As an initial overview, we explain the four key roles involved in the formation of a trust:
- the beneficiaries: who may be entitled to receive income and / or capital from the trust;
- the Trustee: who decides how to invest the capital of the trust and whether or not to distribute income or capital to beneficiaries of the trust;
- the Appointor: who has the right to hire and fire the Trustee; and lastly
- the Guardian: who may be required to give their consent to certain key decisions by the Trustee, for example, a decision to allocate capital to someone other than the primary beneficiaries. The Guardian isn’t a necessary role of the trust, and it is your choice whether to have one or not.
The hard part is then nominating the people for each role!
This decision will be a personal one, and in this episode we help you think through the possible factors and risks that might affect your decision.
Self-Managed Super Funds and Succession Planning
We tune in once more for our soap opera, “Business and Pleasure”. Last episode, Gino transferred a commercial property (i.e. the coffee shop) into his self-managed super fund.
This episode, we find out that Gino has been diagnosed with a serious illness.
Unfortunately it often takes a critical life event or illness for people to start thinking about succession planning.
Hopefully it isn’t too late for Gino to arrange his affairs!
In this episode we discuss who will take control of Gino’s self-managed super fund, including his commercial property.
Our key take away tips are:
- think about whether you want a Binding Death Benefit Nomination for your super fund;
- if you have a self-managed super fund, get an enduring power of attorney in place as soon as possible;
- if you are concerned about a dispute, think about having an independent person act as trustee (or director of the corporate trustee) in the event your illness prevents you from making decisions.
Next episode we continue our conversation about trusts, and revisit the idea of Binding Nominations versus having the right controller of your super fund.
*Please note that Martin and Ed’s asset protection strategies are general in nature and do not take into consideration any of your personal circumstances. You must seek individually tailored advice to ensure you properly protect your business and personal assets.