COVID 19 – asset protection

17/04/2020

As the devastating economic effects of COVID-19 hit businesses and families, it is time to consider whether your nest egg assets are safe from the fallout. Asset protection has never been more important.

The basic principle of asset protection is to separate nest egg assets, such as the family home or family savings from exposure to risk assets, such as a business which may fail. Superannuation is also a good vehicle for protecting assets.

However, care must be taken. The Corporations Act contains provisions for the liquidator of a company to recover assets transferred out of the company to avoid them being taken by creditors. Any assets transferred out of a company must be paid for at reasonable price, especially if transferred to a family member or other related party.

Similarly, if a person goes bankrupt, the bankruptcy trustee can recover assets the person transferred to protect them from creditors. Assets transferred by a person before they became bankrupt at less than full value can generally be recovered by the bankruptcy trustee.

For advice on asset protection, please contact Tim Somerville 99232321 or tsomerville@somervillelegal.com.au.

 

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