So what is asset protection?  Imagine you are 50 years old having spent a good part of your life working hard, taking the usual commercial risks, managing the never ending problems with customers, staff, suppliers, banks, the IRD – you have done very well and have got to the stage where your wealth has been built to the extent that you are looking forward to an enjoyable retirement and being able to pass on what is left to your children.

But then something similar to what happened to a client of ours occurs. One of his staff, after a long lunch, lost control of his company car and crashed into a shopfront.  The resulting fire was quickly put out, but the damage nevertheless exceeded $750,000.  As the driver had been drinking, the insurance was void and the business was held by the Court to be liable for the full cost of reinstatement.

If you are in business, you run the risk of losing all your assets.  It does not matter whether you have a small service business, practise a profession or a trade.  You are at risk of someone making a claim against you and all of your assets.

Asset protection is about reviewing the way you carry on your business, trade or profession, and how you own your wealth, to ensure that if the worst occurs you do not lose everything that you have worked so hard to create.

Of course we are not talking about disposing of assets to avoid your creditors when you are about to go bankrupt.  By then it is too late.  If you try to protect your assets in those circumstances, it is likely that more harm than good will be done and you could even face prosecution and/or a term in jail.

Asset protection is sensibly organising your affairs whilst things are going well.

Appropriate and timely planning will ensure that your hard earned assets are protected.  That way, if the unexpected occurs, you are prepared.  In the above example, our client’s business was a company, so even though it had to pay, our client’s personal assets were not at risk. His savings and investments were protected.  In another similar instance, a client who was a sole trader, i.e. not a company, had put his assets into a Trust.  Again these assets could not be touched.  They remained fully protected from unexpected claims.