Paul Glossop: Welcome guys, to Pure Property Investment one-on-one. Today I’m joined by Munzurul Khan. Munzurul is the principle of Keshab Chartered Accountants. Thanks for joining us Munzurul.
What I’d like to talk about today, if you don’t mind Munzurul, is a little bit more about asset protection when it comes down to buying properties, or buying any asset for that matter, and having some sort of defense in place for the offense in which you undertake when buying assets to plan for a better future.
Sometimes unfortunately the lesser known or lesser thought of aspect of buying property is planning for what if things go wrong, or what if my health deteriorates, or any things that are unforeseen and not necessarily planning accordingly. So Munzurul if you wouldn’t mind sharing maybe some of the different strategies that people could think about when it comes down to asset protection.
Munzurul Khan: But, absolutely vital . As it is that asset protection is a mitigation, right? There’s no use of having this big portfolio of asset if everything is subject to potential, some level of litigation, that everything sort of falls apart as a house of cards are such, right? So you have to have the asset protection. What are these strategies? There are many strategies, right. The fundamental of the asset protection I suppose is purchasing on the right structure as such. So trust as an example provides you a certain level of asset protection, and the reason why it does it is that you really don’t own anything on a trust, technically speaking, you sort of more control. And because you are controller as opposed to the proprietor, you cannot be litigated as such. So trust’s as people buy quite a bit of asset as such.
The other most common asset protection is I suppose to purchase investment property into the lower risking member, the spouse as such. So as an example the husband and wife, and let’s just say the wife is in the open world, it’s sort of a significant level of revenue, and significant level of risk viewer as an example, then the principal place of residence which is your home, your home perhaps should be bought on your husband’s name. So depending on what the circumstances are. Now what people sort of also say is that, sometimes when you’ve got a certain level of leverage you’ve got a 80%-90%, you’ve got some inbuilt sort of an asset protection. Then you go into a whole lot of complex sort of a structure that you might take a second mortgage against your property, you may create a sort of a piggy trust, an asset holding trust where you create a sort of an additional level of charge on your property.
There’s a whole bunch of ways that one can do that. But what I will say is that I would also like to take a step back and say that while the asset protection is fundamental, it is important, but it is one piece out of your entire investment portfolio. So you still need to have your goals and objectives in the longer period of time and purchase with all of your objectives including the asset protection.
Paul Glossop: Brilliant. Yeah there’s a few things again I think you sort of talked about the structures are key because they can protect and mitigate, but it doesn’t change the fact that the objective of that property still remains the objective of that property. And that fits into the overarching objective of what you’re trying to achieve with those actual purchases the structures in which you buy them under is definitely important, and again very important in the early stages before you sign contracts, because much of the time as you know mate, it’s very expensive or sometimes impossible to undo.
So you really need to understand; A) Why you are buying the property, and B) The structure in which you’re buying that property, to give yourself that level of protection down the track that you should be thinking about beforehand. So, the right people to speak to are people such as Munzurul, who is a chartered accountant understands property like no one else I know.
His contact details are at the bottom of the screen so feel free to contact Munzurul and his team, if you do wish too. And also from our end our contact details are at the bottom of the screen, so feel free to contact us if you do have any questions at all regarding property structures and your objectives. We’ll catch up with you soon. Cheers!