The following case study relates to a real life example of how we helped Craig
protect over $20,000,000 in business and personal assets

Whilst this is an actual example, all personal details have been changed, for confidentiality purposes.

Our client

Craig was referred to us by a colleague 5 years ago. He is a high net worth individual earning over $5M per annum.

Craig was in the process of buying a farm for $3M which engages in primary production and buying a share in a business valued at $5M. He also trades shares and has a portfolio valued at approximately $2M which he planned to significantly increase.

Whilst tax minimisation was important, his main concern was to protect his assets from potential business and personal lawsuits, and wanted advice on how to structure his investments to provide asset protection.

The problems

  • As Craig was purchasing a farm that engages in primary production, he is required to hire employees to operate the farm and manage livestock. If the farm was purchased in Craig’s name and he was successfully sued by an employee that was injured on the farm, for example, not only would his farm be at risk, so too will every other asset he owns in his name, including his family home, motor vehicles, cash and shares
  • If Craig was to purchase shares in the business and it was successfully sued, his business and personal assets could also be at high risk
  • If Craig continued to trade shares in his personal name, and was sued for any reason, his portfolio and any other asset he owns would be at risk
  • If Craig died, any asset held in his name would be distributed to family members and beneficiaries as per the instructions of his will. This could put his hard earned assets at risk in the event his beneficiaries were sued or had relationship breakdowns with their spouses in the future
  • Holding assets in Craig’s name could also create unnecessary taxation liabilities that could cost his future beneficiaries hundreds of thousands in taxes

The Tax Effective helped Craig

  • We established a property discretionary trust with a corporate trustee which was used to purchase the farm
  • We established an investment discretionary trust with a corporate trustee for Craig to trade his shares and build his portfolio
  • We established an equity trust with a corporate trustee for Craig to purchase and own the shares in the business he was planning to buy
  • We ensured that all the trust deeds were correctly drafted to ensure that in the event of Craig’s death, all assets will remain in his trusts and that the income and capital can only be distributed to beneficiaries in his bloodline
  • We also established a self-managed super fund in conjunction with the three trusts to give Craig control of his super investments

The results

As a result of our recommendations, Craig has achieved the following results:

  • Craig’s assets held in trust have significantly increased to an estimated market valued in excess of $20M
  • If Craig was successfully sued, only the assets in his personal name would be at risk. His $20M of trust assets would be out of reach from creditors
  • By holding the farm in a separate trust, if an employee or contractor working on the farm successfully sued for damages, the only asset at risk in this instance would be the farm, not assets held in Craig’s personal name or other trusts
  • If the business went bankrupt or was successfully sued, only the asset in the trust that owns Craig’s business shares would be at risk
  • Any income or capital gains derived from any of the trusts can be distributed to low income beneficiaries or family members to minimise or eliminate ongoing tax liabilities
  • Whilst the assets are not held in Craig’s name, he still has complete control of all income and capital derived in the trust
  • If Craig died, all trust assets can remain in the trust and his beneficiaries will inherit the same asset protection and taxation benefits of the trusts

Post becoming clients

Due to the complexity of Craig’s tax and financial affairs, we implemented an online accounting solution that takes care of all of Craig’s accounting and compliance requirements and provides a platform to view the financial performance of his trust assets in real time.

We meet with Craig once a quarter to help him identify potential risks, as well as tax planning, business and investment opportunities as they arise.

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