Wanting to build your wealth through property is a common goal for many Australian investors. However, protecting the assets that you’ve grown may be of equal importance. More than covering the physical building from natural disasters or malicious damage from tenants, asset protection helps protect assets from being repossessed by creditors and can even help protect assets from marital separation risk.
Below, we step you through three of the most prominent asset protection strategies that you may be able to adopt as an Aussie property investor to help protect your assets.
Why do I need asset protection for an investment property?
Developing an asset protection strategy to mitigate risk is just as crucial as building your asset portfolio initially. However, Australians still underestimate the importance of asset protection strategies to secure their assets.
While insurance offers some protection against risks, it’s not a comprehensive safeguard. Whether it comes from tax liabilities, soured business ventures, legal disputes, estate planning discrepancies, debt obligations or marital separation, an individual or business’ assets are at risk of being used to satisfy the liability.
How do I protect my property assets?
Protecting your property assets in Australia involves various legal and financial strategies to minimise risks and safeguard your investments. It’s essential to consult with legal and financial professionals who specialise in Australian property law and asset protection for personalised advice. Here are some strategies you may consider:
Asset ownership structure
Choose the right ownership structure for your properties. Common options include individual ownership, joint ownership, trusts, or companies. The choice can impact taxation, liability, and succession planning.
Purchase adequate property insurance coverage to protect against damage, theft, and liability claims. Consider landlord insurance if you are renting out the property or title insurance to help protect against defects in the property’s title, which can lead to legal disputes.
Consider setting up a family trust, which can provide asset protection and tax benefits. Seek advice from a legal expert on structuring the trust properly.
Manage property-related debts carefully. It is prudent to avoid over-leveraging your assets to reduce financial risk.
Binding financial agreements
If you own property before marriage or a de-facto relationship, a ‘pre-nuptial agreement’ (known as a binding financial agreement) may help to protect your assets in case of divorce or separation.
Creating a comprehensive estate plan that includes wills and powers of attorney may help ensure that your property assets are distributed according to your wishes.
Separate personal and business assets
If you operate a business, consider a separate legal structure for it to protect your personal assets in case of business-related liabilities.
Regularly consult with legal professionals who specialise in asset protection and property law in Australia to stay informed about changing regulations and to update your strategies accordingly.
Professional property management
If you own rental properties, consider professional property management services to ensure compliance with laws and regulations and to minimise legal risks associated with tenant disputes.
If you’re involved in property development or investment as a business, consider the appropriate legal structure, such as a company or partnership, and consult with experts to limit liability.
How Apollo Investment can help secure your SDA property investment
Remember that property asset protection is a complex field, and the right strategy for you may depend on your specific circumstances and goals. Always seek professional advice tailored to your situation to ensure the best protection for your assets.
At Apollo Investment, we assist property investors through every step of the NDIS property investment journey. Talk with the team at Apollo Investment about how you can help protect your investment today.