The key to effective asset protection strategy lies in timely and careful planning. There are a variety of possible strategies, but it should be rememberd that everyone's circumstances are different, and what works for one person cannot always be applied to others.

The most basic form of protection is insurance: insuring comprehensive coverage to an appropriate level is a quick and easy means of providing basic asset protection.

The situation is more complex for those who own and operate businesses. Wherever possible, a business should be run through a structure that limits personal liability. For instance, the formation of a limited liability company to conduct business provides far greater protection for personal assets than operating through a partnership of individuals.

Transferring the assets into the name of a low-risk individual, usually that of a spouse, is another strategy that can provide some protection. But, you should first take into consideration the strength of your relationship with your spouse.

Assets may also be transferred into a discretionary trust. This trust is for the benefit of a family as a group, but no individual family member has a "fixed" interest. The assets are then protected in the event of bankruptcy.

A superannuation is another, very effective method of asset protection. By placing assets within a superannuation fund, they are usually protected from creditors.

A self-managed super fund will also give you control over the fund's investments.

Entering into a maintenance agreement with your spouse by using family law is another strategy for protecting assets from creditors. However, again, this strategy should be approached in consideration of your relationship with your spouse.

A concept known as "negative gearing" may provide protection for assets. This is done by borrowing against current assets to create a mortgage over them. This will either reduce or even eliminate "ownership" of the asset, thereby making it unavailable to creditors in the event of bankruptcy.

These are a few of the available strategies. But, once again, what may be appropriate for one person will not necessarily suit another. So careful and timely planning is the key.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.