Asset Protection & Dispute Prevention
Asset Protection
In an estate planning context, assets can come under threat from a variety of sources, eg:
• The provision of a guarantee or indemnity, eg in respect of the business of a spouse or of a home or other loan taken out by a child;
• A future family law claim made against a child, eg where funds are to be provided to help the child buy a house;
• Debts incurred in operating a business; or
• A future claim against a deceased estate by a hostile or aggrieved family member.
Many of these risks can be removed or reduced if they are addressed long before the risk event occurring, eg by carefully drafted parent to child loan agreements (preferably secured) or by ensuring that assets fall outside the reach of an estate challenge. For people starting new domestic relationship, trusts can be established to ensure children from an earlier relationship are financially protected.
Dispute Prevention
The costs of defending a deceased estate from challenge by an aggrieved family member can be very high and yet so often easy to predict during the lifetime of the estate planner.
The strategies for preempting an estate challenge in Australia can be divided into 2, ie the more limited options for assets subject to New South Wales succession law and the greater range of choices available for assets subject to the succession laws in other states and territories.
In all Australian jurisdictions, care must be taken to ensure that any transfer of wealth out of reach of challenge is effective, eg any gifts must actually occur, rather than being mere journal entries. Dispute prevention options often include gift and loan back strategies, designed to reduce the net equity of assets otherwise forming part of a personal estate. Such strategies are often a much less expensive option than transfers of assets that might trigger a capital gains tax or land transfer duty liability.
Get in touch and learn more today.
Contact the Estate Planning Equation team today and learn more about our services.