Why should I restructure my assets if no beneficiaries?

Question from Luka updated on 25th September 2008:

I have 5 rental properties plus 1 home in the process of converting to home & income. 2 rentals are owned through LAQC and the rest in my own name. I have just started the process of restructuring my properties by setting up a Trust and transferring the Home & Income property into it and selling the remaining 3 properties into a second LAQC. After talking to some family members they question the logic in me doing this as I am single male 55 yrs and no kids.This really stopped me in my tracks and thought they are right. Why go through all the hassles when you don't have kids/partner that will benefit from it? I am now putting the whole restructuring exercise on hold. What do you think?

Our expert responded:

This is a great question with unfortunately, no right or wrong answer, because it all depends on the individual. One thing you are accomplishing by going through a restructuring process is to tidy up your affairs, making it much easier for your family. What I might question is whether or not you should use an LAQC, or if you should put all of the properties into a trust. Here are some things for you to consider:

  • A trust in many ways is like a living will, and gives a person the ability (through the trustees) to conrol their assets from the grave, as it were. The question is, where do you want your estate to go to on your death? If you want it to go to siblings or nieces and nephews, or maybe by-pass them completely and give everything away to charity, a trust will make this easier for you.
  • Even though you are single now, it does not mean that you will necessarily never have a relationship. A trust will protect your assets more effectively than owning them in your personal name. However, it would still be advisable to enter into a Section 21 Contracting Out Agreement with a new partner.
  • You have a substantial asset base and under the asset testing requirements for aged care, most of that asset base would need to be exhausted before you could qualify for government subsidies. Having your assets in a trust would eliminate that concern.
  • depending on what you do to earn a personal income (salary or wages versus being self-employed), having your assets in a trust will protect your assets in the event that you personally are exposed to any risk.

The best thing you can do is to sit down with a structuring expert and discuss these and other issues with them to ensure you are making decisions on an informed basis.

Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth.  She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.





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