Let me ask you, "Do you have any assets? Next question, "Do you care if you lose everything you own? If you answered YES to both questions, you need some sort of Asset Protection.

To start off with, you first must establish a company and the second, a trust. The company can be a simple $2 company and it will act as the Trustee for the trust that will be established under it. The trust will own all the assets and as there is technically no owner of the trust, just the "Trustee" (the company) and the beneficiaries. No one is subject to having themselves sued for the assets of the trust therefore making the assets secure. One of the misconceptions of this type of arrangement is that the Trustee sort of owns the trust… it doesn't.

So, this is how it works. You become the director and shareholder of the company. This means you control the company and own the company as the shareholder. As the company is the trustee for the trust, you control the trust, but not own the trust. As I said before, no one owns the trust or its assets other than the trust itself. As all the assets are in the name of the trust, it owns everything, and the only people who can benefit from these assets are the Beneficiaries, not the trustee. As the trustee, the company (you) will nominate who the beneficiaries are. However, they have no say in the running of the trust, only the trustee does. You see how it works? You end up controlling the whole thing but have no ownership of anything and without ownership, nobody will sue you for what you haven't got. Make sense?

This is just a simple way to protect your assets. There are several ways to improve this situation, such as having multiple trusts to further isolate litigants from making a claim on the assets of the trust. But this can only happen if someone has a claim on the assets of the trust, which would be rare as the assets would be insured for third party claims. But rest assured, if your assets are in a trust like this, civil action against you personally can't penetrate the trust and make a claim against the assets of the trust.

When somebody sues you, if successful, they can take your house, investments, other belongings and possibly your future income and future assets. Did you know that? If you place all your assets in a company, they can still get the lot by suing the director's assets as well as those of the company. In the example above, using the Trust and the Company, you are protected, apart from anything in your name and your future assets and income. But that's a lot better than losing the lot!

This structure can also be expanded by simply adding more trusts under the control of the trustee. For example, you can add further trusts for extra investments, add a trust for a business which would hold business assets and another one that could actually run the business. Doing things this way is essential because you need to isolate assets so there can be no linkage of assets if one trust for whatever reason gets into trouble. However, you only need one trustee company.

There is downside to all of this though. And that is stamp duty, transfer costs and of course, Capital Gains Tax. These costs must be considered before proceeding. You should also consider the chances of someone suing you in the first place. If you are in business for yourself, then the chances are much higher than if you were an employee with few risks. However, you always get "done" when you least expect it. I know, it's happened to me on one occasion from someone I never expected, but I was able to limit the damage due to some good planning. So, don't think it will never happen to you…… it does.

A way around transferring things and avoiding the Capital Gains Tax thing is to leave the family home right where it is, in your ownership. Because, as you know, while it's in your name and it's your primary place of residence, it is exempt from CGT and Land Tax. But here's the trick. Load up the mortgage to the max. Get a home equity loan, say up to 80 or 90% of its value, and stick this money in the trust in the form of a new property or other investments. This way you have stamp-duty-free just transferred your assets into a trust! Bloody brilliant, eh!

What's more you have also reduced the amount the buggers can sue you for by reducing your personal assets by 80 or 90% and at the same time retained your CGT free status on your home.