Asset Protection Advice


Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

A Client may be looking to protect his assets from a variety of financial predators:

For example, a business owner might be looking to hold family shares on a trust to protect them from her son entering in to a marriage that doesn’t last

An investor might want to hold property or other assets in a structure so that those with too much time on their hand

A family might also want to hold their assets through a structure to shelter their wealth from inheritance tax

A property developer might look to arrange his ventures in a way that legal claims arising in respect of historic developments do not ‘pollute’ current and future developments

These are all examples of asset protection.

In modern times, with a movement towards transparency and a shift in focus from income taxes to wealth taxes some of these issues are harder than others

As with all tax and financial planning there is no one size fits all. One must take into account one’s personal and commercial objectives and work from there.

Traditionally, trusts have been used extensively. Of course, the press would like us all to believe that a trust is some kind of magic financial bucket. Once one drops assets in to the magic bucket it is free of all taxes.

This is, of course, far from the truth.

However, instead it is our experience that trusts are almost always used as a means of making a gift of cash or assets – including shares in the family business – but adding strings to that gift. For example, there is comfort in giving someone the dividends on the shares but they are not prepared to allow then to have the underlying shares in their own name.

Changes to trusts a decade ago made trusts unsuitable in many scenarios. As such, alternative structures are used – such as investment companies, family partnerships, overseas pension schemes and foundations.

The type of structure will depend on what you are trying to achieve and longer-term ambitions for the structure.

Of course, one of these structures might be the able to meet some or all of your objectives. However, there are a number tax implications of transferring assets to structures – generally, one will need to manage any Capital Gains Tax and IHT implications in particular.

The ongoing tax position will largely depend not only on the structure but the type of assets owned and their location.

One needs to carefully consider to who, and by what means, funds might ultimately be paid as this will drive the tax implications.

This is a complex area and one needs to take legal advice as well as tax advice. However, in the first instance, please do not hesitate to get in touch and we can discuss your requirements.

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