What Is Asset Protection?

A well designed asset protection plan aims at deterring potential litigants from directing fraudulent claims against you!

There is nothing illegal or immoral in trying to protect your assets from such frivolous lawsuits.

Any legitimate claims made against you will, or should, be covered by your insurance policies.

It is the fraudulent claims made by some money hungry litigant that a good asset protection plan is geared to protect you from.

Create a Firewall Around Your Assets

A good asset protection plan consists of multiple layers of protection.

The first 'firewall' in any good asset protection strategy is your insurance.

It is strongly recommended that you have all the necessary insurances in place such as public liability, professional indemnity and so on. You should also endeavour to review your level of cover periodically to ensure it keeps pace with increasing values and inflation. Remember insurance companies are in the business of making money by collecting premiums – not in the business of paying claims. You need to understand what you are covered for and in what circumstances your insurance company will refuse to pay a claim. For instance, did you know that if you have a motor vehicle accident and you have forgotten to pay your registration, or the tyres on your car are balding or you have modified your vehicle in some way and neglected to inform the insurance company, the insurance company can in any of these circumstances, refuse to honour your claim.

Our second layer of protection is the structure used to invest in.

Ultimate asset protection is achieved through the use of a discretionary trust with a corporate trustee. When you purchase an asset in your own name or in partnership, this provides you with no protection whatsoever. In fact you may as well be standing there naked with a target sign pinned to your forehead!! Also if you are in a partnership bear in mind that you have unlimited liability for the actions of the other Partners.

Our final weapon in an effective asset protection strategy involves the use of debt. By structuring both your existing and proposed loans in different ways, we can create the illusion that you are what we like to call a ‘penniless bum’. That is, from the outside looking in it appears that you may own assets, such as investment properties, however the debt against these assets is at the same level (or even better, higher) than the asset value. In other words you appear to have negative equity. This does not necessarily translate into taking on higher levels of debt, rather it involves planning your liabilities in a more functional way.

Are You At Risk?

Did you know a thief can enter your home, and if he injures himself, the thief can actually take you to court and sue you for damages?

Or, that a tenant that injures himself or herself in your investment property can sue you for damages?

Or, that a disgruntled ex-employee can claim that they were unfairly dismissed from your business and sue you for damages?

You Can Be Sued For A Range Of Issues Such As

*Personal Injury

*Malpractice

*Errors and Omissions

*Product Liability

*Involuntary Manslaughter

*Securities and Exchange Fraud

*Contract Violations

*Labour Relations

*Copyright

*Patent or Trademark Infringements

*Employees' Civil Rights/Employer Discrimination

*Sexual Harassment

*Defamation

Anyone with any assets of value is at risk!

The following are facts taken from actual lawsuits...

Peakhurst Inn

A thief was trying to rob the Peakhurst Inn Hotel, in NSW and after being refused entry at the door tried to enter via the manager's flat. The manager caught him and beat him up badly. The robber then sued the manager for the injuries inflicted upon him... and won. The mother of the robber also sued and won, for the "undue mental anguish" she suffered when she saw her beaten up son in hospital!

Well guess what!, insurance does not cover this type of situation (it is criminal to beat someone up). And it gets even better, the manager did not have to pay the damages, the owner of the hotel did, even though they lived 20 minutes away and were not present at the hotel when the attempted robbery occurred.

Tenant Awarded $1.2m Payout For Back Injury

A woman who injured her back when she tripped on a hole in a carpet sued her landlady and won $1.2m in damages. The tenant had fallen in the hallway of a house and landed on the bathroom floor sustaining a serious injury.

The tenant sued the owner of the house claiming the carpet had been allowed to remain in a dangerous state, that it had not been repaired after requests to do so, and that no interim measures had been taken to ensure that the carpet could not be tripped over.

The property owner argued that the tenant had contributed to the event as she had taken a mat, which had been covering the hole, outside to air at the time the incident occurred. The judge awarded damages to the tenant for past and future care, for loss of future earnings, interest and special Damages. Total judgement for the tenant against the landlord $1,248,402.

The thing about this case is that the injury happenned in 1990, yet this was awarded in 2003. So you need to ask yourself if she would have had $1.2M Public Liablity Insurance, this would have been considered to have been alot in 1990. What if the insurer was HIH?, do you keep building assets while all this is going on, not knowing whether all your assets could be seized from you to satisfy the judgement? the questions go on!

$300,000 For Golf Cart Crash

An elderly golfer seriously injured when her playing partner ran over her in a motorised cart was awarded almost $300,000 in compensation. The golfer, was pushing her golf buggy towards the third tee when her playing partner, lost control of the cart she was driving. Mrs Smith sued both the Golf Club and her playing partner , and was awarded $292,216 which included $158,966 for past and future medical expenses and $130,000 for general damages and interest.

How do Sentinel Asset Protection Specialists Fit Into the Picture?

We are advisors and consultants in asset protection.

This area is our specialty, it is all we do.

We see our role as that of an educator.

By that we mean that we set out to explain the various strategies a client has available to them and then leave the decision making up to the client. We do not pressure our clients into making any decisions they are not ready to make...we aim to solve problems for our clients, not make their life more confusing!

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