The start of a new year is a time for reflection and planning for all of us. You might be setting some big, dreamy, personal goals that will outlast the hangover of New Year’s Day. 

But if you’re a business owner, you’re likely also in goal setting mode too and putting your ‘blue ocean strategy’ thinking hat on to create long term success. This is why asset protection should be a top priority for you in 2023. It’s a perfect time to think about what will happen to you and your business if things don’t quite go as planned.

What is asset protection?

If you’re a business owner, your assets may be at risk to creditors, which include lenders, suppliers, the trustee in bankruptcy, the ATO, and any other people or organizations you owe money to. You also need to consider any statutory obligations that come with your role as a director and/or employer.

Asset protection is the process of legally safeguarding your assets from creditors, lawsuits, and other types of claims. For example, what will happen to your assets if an unexpected event occurs, such as a litigation or a personal accident? What happens if your business falls into tough times and the creditors come calling? 

Strategies for asset protection

There are several ways to protect your wealth and assets. Some common strategies include:

  1. Creating a trust: A trust can be used to protect assets such as property, investments, and cash from creditors and litigants.
  2. Setting up a company: By transferring assets to a company, you can limit your personal liability and make it more difficult for creditors to access those assets.
  3. Superannuation funds: Superannuation funds can provide protection against creditors as long as they are set up correctly.
  4. Offshore structures: Some individuals may consider using offshore structures, such as foreign companies or trusts, to provide an additional layer of asset protection.
  5. Insurance: Obtaining insurance for assets can provide protection against risks such as theft, fire, and other types of damage.
  6. Estate planning: This is the process of organising and preparing for the distribution of your assets after you pass away. It involves creating a plan that takes into account your financial situation, your goals, and the needs of your loved ones (including creating a will, potentially setting up trusts, naming beneficiaries, having a lawyer draft up powers of attorney (giving a person, or trustee organisation the legal authority to act for you to manage your assets and make financial and legal decisions on your behalf) and appointing an enduring guardian to make decisions about your health and lifestyle in the event you cannot make these decisions for yourself.

Protecting the Family Home

One of the primary concerns of most people is protecting the family home. The family home is often one of the most significant assets a person can own but as it is generally held in an individual’s name, it can 
be at risk.

There are several ways a business owner can ‘ring-fence’ the family home from his or her business activities. However, there are some risks and misconceptions about protecting the family home. 

Establishing a business in a company or trust structure gives the owner the protection of the corporate veil and generally creditors only have access to the company’s or trust’s assets. But if a company or trust can’t pay its debts, there is a risk that creditors will be able access the personal assets of the director or trustee to pay some or all of the debts.

One strategy is to give majority ownership of the home to a person who is not at risk from any bankruptcy or litigation procedures, for example, your spouse. This might lead to some stamp duty exemptions and doesn’t usually result in any capital gains tax (CGT) liabilities.

However, under the presumption of resulting trust, a party can be treated as a beneficial owner of property under the law of equity, despite the fact they are not the legal owner of the property.  The presumption generally arises where a person contributes purchase money to a property but is not registered on title as an owner, or where a person transfers a property or part of a property to another for no payment.

If a resulting trust can be established, the creditors of the at-risk party may be able to lay claim to an interest in the family home – even if the home is solely in the name of the other partner – unless evidence shows the transfer was intended as a gift (referred to as the ‘presumption of advancement’). There are a number of other factors to consider under the Bankruptcy Law as to whether or not a presumption of advancement would arise, and it ultimately comes down to the intention of the parties.

Currently, the “presumption” of advancement applies only in cases of gifts or contributions made by a husband to a wife, or by a parent to a child, however the High Court in Bosanac v Commissioner of Taxation [2022] HCA 34 indicated that it is open to expanding the categories to align with current values.

An alternative strategy to signing over the home to the unexposed spouse is to borrow against the property and to allow a related charge to be made over the primary residence, meaning there is very little equity left for creditors to pursue. These are not the only options for business owners, however, so it’s best to obtain advice on the most appropriate strategy for you.

Next Steps

Prior to making any changes to your business structure and other asset protection decisions, it is important to review the potential costs or tax implications that may arise from such alterations in order to effectively protect your assets.

You should consider seeking advice from a legal and financial professional before implementing any of these strategies to make sure that you are complying with all applicable laws and regulations.

For advice on business structure and asset protection, contact us at or call us on 

Leave a Reply

Your email address will not be published. Required fields are marked *