Before you purchase an asset, it is important to consider the most appropriate investment structure to use.

An investment structure refers to how your investments are legally owned. Legal entities can be individuals, partnerships, companies or trusts.

It is important to take the time to review all of the investment structure options before investing. Getting it right at the beginning can have significant long-term benefits, and getting it wrong can be expensive to sort out.

The topic of this paper is ‘effective structuring – protecting your assets’. As I understand my brief, the purpose of the session is to consider tax-effective structuring options and the implications that commonly used tax planning strategies and structures have in an asset protection context.

There are a number of factors advisers need to consider when advising clients on appropriate structures they should use for operating businesses and holding assets and there is often a degree of tension between competing objectives.

In my experience, the main facets that have to be considered are as follows:

• Most clients express a preference for simplicity but unfortunately simple structures often do not provide the best tax or asset protection outcomes.
• All clients are interested in establishing a structure that provides reasonable tax minimisation benefits.
• It is also important to be conscious of protecting non-business assets and accumulated profits from claims against the business entity and directors.
• While it is not often ‘front of mind’ when establishing new structures, it is important to have an eye on the problems that can arise if the clients or family members, die or are involved in family law disputes.

The issues and objectives will also often be different depending upon whether clients are establishing structures to undertake active trading activities or merely want a ‘safe’ investment structure.

In the paper WE will endeavour to initially provide an overview of advantages and disadvantages of alternative structures that are typically used and some high-level asset protection issues. For the balance of the paper, I will look at a number of specific tax and asset protection strategies and issues which have come up in our practice.