Trusts and Asset Protection

Every month, thousands of lawsuits are filed in Australia.
Don’t be a victim. Safeguard your business and personal assets through trusts, before it’s too late.

Why choose us

SMSF expertise and advice matters. Get it all here

A self-managed super fund (SMSF) puts you in the driver’s seat of your financial future, giving you the freedom to invest in assets you know and understand best. And with the tax and cost benefits that come with SMSFs, allow you to build significantly more tax-free wealth.

This means more money and a better lifestyle when you retire.At RNO Financial, we understand that you’re busy and that SMSF rules are complicated.

That’s why we created a complete A-Z solution, giving you access to all of the support and expertise you need to easily manage and create lasting wealth through your super.

Type of Trust

Discretionary Family Trust

Family trusts are established to manage, protect, and pass on family assets including shares, personal property, and the family’s business from one generation to another.

Income and capital gains can be distributed at the trustee’s discretion to any family member they see fit. This includes family members at lower marginal tax rates as a means for reducing tax obligations. They can also exclude income and capital payments to troubled family members.

Family members might include your own family lineage along with your partner’s parents, children, grandparents, brothers, sisters, nephews, nieces, and their spouses.

Testamentary Trust

A testamentary trust is established according to instructions in a will. So it does not exist until the person making those provisions passes away.

Rather than the deceased person’s assets going directly to beneficiaries, the assets are held in trust on behalf of those beneficiaries. Funds are then distributed according to the deceased’s rules and conditions.

A testamentary trust can protect the assets a beneficiary may receive in the event of bankruptcy, business lawsuit, or relationship breakdown. Unlike discretionary family trusts, minors receive the adult tax-free threshold of $18,200, which means you can effectively distribute trust income and capital gains among children, increasing the net income distribution to the family.

Special Disability Triust

Special disability trusts can be established to help family members and caregivers provide for the future care and accommodation needs of disabled or vulnerable family members. They can also attract social security means test concessions for the beneficiary and those family members establishing the Special Disability Trust.

Family Lineage Trust

Family lineage trusts are designed to keep money and assets in the family. Protecting the inheritance of your children and their descendants – children and grandchildren – from seizure following future divorces or separations, creditor claims, and bankruptcy claims. They can also be used to shield future generations from unnecessary capital gains taxes and stamp duty issues

Spendthrift Trust

A spendthrift trust is a property control trust that limits an irresponsible beneficiary’s access to trust capital and income. This restriction protects trust property from a beneficiary who might squander the trust property and his or her creditors if they have control of the asset.

Examples of spendthrift beneficiaries include family members who aren’t financially responsible, could be easily deceived, could easily fall into debt with creditors, or have an addiction that could cause him or her to
squander the money.

Unit Trust

A unit trust is a specific type of trust that divides the beneficial ownership of the trust property into units. It differs from a family (discretionary) trust in that trust property in the unit trust is held absolutely for the unit holder. Therefore, it does not give the trustee the discretion to distribute income or capital among unit holders. Distributions must be allocated in accordance to units held in trust.

Business Trust

There are numerous types of asset holding, licence, and service trusts that may be established for a business. But business trusts are essentially used to manage and protect that business from loss due to lawsuits filed by employees, clients, and creditors.

They’re also used to separate your personal from your business assets and to ensure family assets are out of reach in the event your business is sued or files for bankruptcy. Your business assets are also protected in the event you – personally – are sued.

Similar to family trusts, business profits can also be distributed effectively to reduce taxes and increase net business profit. Business trusts can further access small business tax concessions. In other words, if you sell your business, you could be exempt from capital gains tax.

This could save you tens – even hundreds of thousands – of dollars in taxes.

7. Mitigate family dispute

Because trust assets aren’t held in your name, they aren’t included in your will. Since you are not the legal owner of the assets, you can avoid probate proceedings and family disputes over trust assets.

1. Protect your personal and business assets.

Trusts can protect your assets from a variety of potential threats including bankruptcy, malpractice, accidents, irresponsible heirs, and gold diggers who marry into your family. They can also create a firewall that insulates your personal assets from potential business lawsuits and creditors.

2. Get a superb tax-planning tool

Trusts can play an important role in business and family tax planning. Income earned from your business, investments, and capital gains could be paid out to trust beneficiaries based on lower marginal tax rates. This could save you tens – even hundreds of thousands – of dollars in taxes.

3. Take advantage of a powerful wealth-creation vehicle

Growth and income-producing assets may be transferred and purchased through a trust. And, with its ability to distribute profits effectively, this means more of your wealth could be reinvested back into assets or in other investment opportunities – significantly increasing your wealth-creation potential.

4. Enhance personal financial planning

Families can use trusts for financial planning purposes, meeting with an adviser and regularly discussing investment options and strategies. This includes profit distribution plans and charitable donation beneficiaries. Meetings can also be used to identify recipients of income distributions and inheritable assets.

6. Keep assets in your family lineage

Trusts allow you to put conditions on how and to whom assets are distributed after you pass away. For example, you can create special trusts that keep assets in your family lineage in the event your spouse remarries, ensuring assets don’t end up benefiting someone you’ve never met.

5. Minimise tax obligations and better plan for future generations

Trusts let you transfer business and family wealth to future generations without any tax consequences. Use them to easily keep trust assets out of reach from future creditors or relationship breakdowns. Trusts can also protect future generations who may not be mature enough to handle the financial responsibility.

Seven benefits of trusts

Eight Reasons Why You Should Set-up a Self-managed Super Fund

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Take full control of your super

With a self-managed super fund, you don’t have to rely on fund managers to invest your retirement savings. Instead, you have the freedom to invest in assets that you know and understand best

Take full control of your super

With a self-managed super fund, you don’t have to rely on fund managers to invest your retirement savings. Instead, you have the freedom to invest in assets that you know and understand best

Take full control of your super

With a self-managed super fund, you don’t have to rely on fund managers to invest your retirement savings. Instead, you have the freedom to invest in assets that you know and understand best

Take full control of your super

With a self-managed super fund, you don’t have to rely on fund managers to invest your retirement savings. Instead, you have the freedom to invest in assets that you know and understand best

Take full control of your super

With a self-managed super fund, you don’t have to rely on fund managers to invest your retirement savings. Instead, you have the freedom to invest in assets that you know and understand best

Take full control of your super

With a self-managed super fund, you don’t have to rely on fund managers to invest your retirement savings. Instead, you have the freedom to invest in assets that you know and understand best

Take full control of your super

With a self-managed super fund, you don’t have to rely on fund managers to invest your retirement savings. Instead, you have the freedom to invest in assets that you know and understand best

Take full control of your super

With a self-managed super fund, you don’t have to rely on fund managers to invest your retirement savings. Instead, you have the freedom to invest in assets that you know and understand best

Why choose us

Myths about Assets Protection

Consider this scenario: If you held a net worth of $5 million, you would not be as affected by a $1 million lawsuit as someone else holding a net worth of just $1 million. The wealthier you are, the easier it is to pay the judgement and carry on with life. Those with fewer assets could potentially lose everything, with bankruptcy the only way out.

NSW is the third most litigious state in the world. Litigation is becoming a new favourite pastime because it’s easier to sue someone and win money than it is to earn it. No one is safe.

The only prerequisite for being a litigation target is owning assets of value to someone else. Those assets could include a family home, investments, money in your bank account, or your business.

You cannot buy insurance as a hedge against every possible scenario.

There are limits to your coverage. For example, you may hold professional liability insurance to protect your assets from lawsuits relating to your business activities. However, that insurance will not help you in the event that you were sued due to someone being hurt in a car accident that was deemed your fault.

Transferring all of your assets to your spouse and/or children, especially after something has happened, will not protect those assets from being seized in a lawsuit. The courts will simply follow the paper trail and consider your family member a party holding those assets in trust for you.

The time to set-up the basics for protecting your assets is right now. If you transfer your assets into an asset protection structure down the road and your assets have grown significantly in value, you may become liable for costly capital gains taxes and stamp duty.

Setting up an asset protection structure is relatively inexpensive. What’s more expensive are the legal fees associated with defending yourself in court. To make matters worse, in the event you fall victim to a lawsuit, you lose not only financially but also psychologically.

Owning your business in a Pty Ltd company makes you a sitting duck for litigation. Why? Because companies are owned by shareholders.

So if you’re sued personally, everything you own in your name is up for grabs including your company shares. This puts your entire business at risk.

Asset protection planning should be based on the presumption that all of your planning, its purpose, and those assets will eventually be known to creditors. This is because, one way or another, it usually is. Asset protection provides the assurance that you don’t have to hide a thing.