In our litigious society, asset protection is increasingly becoming an important consideration. Superannuation, and Self Managed Super Funds (SMSF’s) specifically, represent one of the most effective asset protection structures. This is because the entire interest in an SMSF at the time of bankruptcy is protected from a trustee in bankruptcy. Of course, contribution of assets to a SMSF which are made with the intention of defeating creditors’ interests can be “clawed back” by a trustee in bankruptcy, but the contribution of assets prior to there being any issue should be safe from such treatment. It may be that, subject to capital gains tax and other such issues, a business owner will decide to transfer personally owned shares or business premises to a super fund to benefit from such protection. It should certainly be a consideration when determining your asset protection strategy.
By Joel Hernandez