A Good Time To Protect Your Wealth

6/08/2009

You're probably sick of hearing the expressions, "today's economic climate" and "the global financial crisis". In actual fact, due to government stimulus packages, interest rate cuts and declining petrol prices, experts agree that the recession hasn't affected Australia too badly. Certainly the economy is recovering sooner than expected.

That said, the future remains uncertain. The government looks set to begin withdrawing stimulus for the recovery period.

There has been a decrease in credit spending, and Australian households are predicted to begin focusing more on saving than getting into debt. Less spending points to increased unemployment.  The jobless rate has been predicted to rise to 8.5% by the end of 2010.

While the Reserve Bank recently agreed to keep the interest rate at 3% for the time being, Governor Glenn Stevens, has hinted that interest rates could go up. This is despite climbing unemployment levels, which is unprecedented.

It would seem that now might be a good time to consider how best to hold on to your existing wealth. What strategies do you have in place to protect your wealth against future pitfalls?

Enter wealth protection.

At its core, wealth protection is about protecting your personal or business assets against risk. It's about setting up your affairs the right way.

Consider the following scenario:

You own a house and business, both of which are registered in the same name. If your business falls apart, your home may suddenly be at risk, simply because it is in the same name as the failed business. But a wealth protection strategy can keep your home safe from creditors.

Another common strategy relates to avoiding unintended tax via a testamentary trust. It used to be the case that a trust set up in your children's name meant a reduced tax rate. While that's no longer the case, governments have always applied the lower rate to children receiving income via a testamentary trust under a will. This means that money in the bank ear-marked for under 18's, can earn interest with little or no tax.

And that's just scratching the surface. There are many different ways to keep your wealth safe.
 
Obviously these kinds of strategies are only successful if put in place before the potential risk arises, not after. So wealth protection is about planning ahead.

And there's no such thing as a one size fits all wealth protection strategy. A lawyer who specialises in wealth protection will be able to review your particular circumstances and come up with a plan that best meets your needs.

These days, a little peace of mind for the future is certainly worth considering.

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