Asset protection and leaving the country

[Corporate]

hi all

I am planning to move to the UK in the near future for a minimum of 2 years. I have been saving and investing for a numbers of years and currently hold my wealth in 80% cash and 20% equities (ASX). My plan has always been to accumulate enough funds so that we I return from the UK I can make a sizable deposit on my first home (50-60%).

Currently the funds and equities are held under my name. My main concern is asset protection just in case my current relationship ends.

Has anyone been in a similar situation and what have you done?

Cheers
C

[JBmurc]

Best to talk with your accountant/lawyer most likely you will be looking at a Family trust etc

[iceman]

Corporate I have been in a "similar" situation albeit slightly different. I ended up setting up a Family Trust for asset protection. The recent law change that removed Gift Duty from the tax code makes it easier now to deposit assets into a Family Trust but whether it is "protected" from challenges all depends on how/when the assets have been accumulated, i.e. during or before current relationship.
The length and status of the current relationship also has a major bearing. Suggest you get a good specialised Trust lawyer to advice you. I did and it was worth every cent of it.

[iceman]

Is this because the trust has been tested? Or because you spent lots of money on a lawyer and feel assured that it has been well spent. (Sorry, not critising lawyers or those who spend significant sums on them but the only way to know how whether the money is well spent is to have the trust tested by legal action.)


Without getting into detail Belg, it has been tested (challenged) and was found to have legitimately protected my assets. Had I not sought specific Trust law advice, I would most likely have set it up differently. I would have included property that could have been claimed (by another party) as relationship property despite me never thinking it could be classed as such. Luckily I left it out, gave up part of it, but kept the assets in the Trust out of reach :D

[777]

Also have a look through the IRD site for information on leaving the country/on going relationship with NZ/ tax obligation on worldwide income/etc. Not having a property now probably avoids any problems. At least it will provide you with something you can raise with the "expert" you decide to ask.

[GTM 3442]

It seems as if your issue is relationship property, and that the move overseas is a side issue.

Find the ugliest, nastiest divorce lawyer in your city/town/area, go through your current situation with her, and see how clean you would get picked. This gives you a worst case scenario.

Then do the visit to the accountant - you will be better prepared to understand what they tell you, and more able to relate it to exactly your circumstances.

The IRD website has some reasonable commentary on residency/non-residency. Main criterion is "links to NZ", which is pleasantly fuzzy. Why not simply shift your money to either wherever you go, breaking another link with NZ ?

[iceman]

To defeat a matrimonial/de facto property claim the transfer of assets must be done prior to the marriage or entry into a de facto relationship, or be assets that are not relationship property (eg. an inheritance).

Very good points you make KW. The difficulty however can be that at the outset of a relationship, assets that are not classed as relationship property at that point in time can over time become classed as relationship propert, unless specifically excluded in written agreements or transfers to a Trust prior to the relationship starting. It is a complicated (and forever changing as you point out) area for the average punter and that´s why I do not regret having paid handsomely for good advice

[peterwn]

The trust also needs loving care and attention once set up. This includes annual (at least) trustee meetings, reasonable accounts, etc. If one or more trustees do silly things, then the more open would the trust be open to attack from disaffected partners, creditors, IRD etc. A farmer some years ago had his trust blown wide open by IRD some years ago because he was grossly careless how he operated it. He just spent cash flow willy-nilly during the year then got his accountant to do journal entries between himself, his wife, the kids and the trust at year end. IRD assessed assuming the trust did not exist and the cost of bringing up kids could not be regarded as the kids' income (before the law change requiring a final tax rate of 33% on trust distributions to minors in most cases).