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How to protect your wealth held in your individual name from third party claims without incurring CGT or Stamp Duty

If you are an individual having assets in your personal name, failing to implement asset protection strategies early, places you at serious risk of losing all your wealth to a third party claim.

It can take an individual a lifetime to establish their wealth, however, it could also all be taken away in a matter of moments if an unforeseeable event occurs or if a claim is made against them by a third party. Individuals should consider adopting asset protection strategies to help protect their wealth, particularly people who are engaged in the professional services of giving advice such as a legal professional, director, medical professional, business owner, sole trader service provider, financial planner and accountant. Even if a professional has professional indemnity insurance to protect against risk, the insurance might not always cover them against all claims, particularly if they are found to be negligent. People who carry on a business, should seriously consider adopting asset protection strategies, particularly directors with a personal liability for company debts or personal guarantees, such as under a lease agreement.

What assets are at risk?

The assets particularly at risk from third party creditors include:

  • Personally owned assets (such as the main residence, investment property, shares, investment portfolios, bank accounts and personal assets)
  • Business interests (shares held in the individual’s name)
  • Unpaid Present Entitlements owed to an individual
  • Rights under Loan Agreements or advancements of money to a third party.

When should an asset protection strategy be implemented?

Asset protection should be considered by an individual prior to them acquiring a particular asset. However, not everyone seeks legal advice prior to making an acquisition, therefore, lots of people end up accumulating their wealth in their personal names. Subject to finance restrictions or tax advice, some people are required to purchase their main residence in their personal name.

The simplest solution to achieving asset protection is transferring the personally held assets to a safe haven such as a discretionary trust. However, whilst simple, it can become unaffordable and inefficient for tax purposes as the transfer is likely to have capital gains tax, stamp duty and land tax implications. Individuals will also lose the main residence exemption if they transfer their main residence to a discretionary trust or other entity and will end up paying capital gains tax and land tax.

Another solution to achieving asset protection is by way of a “Gift and Loan Back Strategy”, which is to protect the net equity that resides in the personally held assets. The net equity is gifted to a newly established discretionary trust and lent back to the individual. The newly established discretionary trust then takes security over the assets by way of mortgage over real property or by security deed over personally held property, which is then registered on the Personal Property Securities Register, which elevates the newly established discretionary trust to a position of a secured creditor. As we are only dealing with the net equity held in the personal held assets, there are no capital gains tax or stamp duty implications.


Gift and Loan Back arrangements are considered as a pre-emptive process for asset protection of net equity in assets when you are solvent and generally in a good financial position. In the event that you are subjected to bankruptcy or insolvency claims, there is a risk that a gift and loan back transaction can be reversed and “clawed” back by creditors under section 120 and section 121 of the Bankruptcy Act 1966 (Cth) (‘the Act’).

Section 120 of the Act states that a transfer of property by a person who later becomes bankrupt is void if:

  • There is no consideration or was undervalued; and
  • The transfer was within 5 years of the date of bankruptcy.

Section 121 of the Act broadly states that a transfer of property by a person who becomes bankrupt will be considered void if:

  • The property would have been available to the creditors if the transfer had not occurred; and
  • The transferor’s primary purpose for the transfer was to prevent the property being available for distribution to creditors or to hinder or delay in making the property available for distribution to the creditors. 

Accordingly, the Gift and Loan Back arrangement is to be only implemented if you are currently solvent and there are no known or foreseeable creditors. 

To maximise asset protection, individuals should not leave asset protection too late.

Contact Us

MistryFallahi Lawyers & Business Advisors has extensive experience in implementing asset protection strategies for professionals and business owners. Our asset protection team possesses expertise in all aspects of asset protection, including; structuring, establishing family discretionary trusts, establishing companies, loan agreements, family law separation and estate planning.

To learn more about how we can help you, please contact us on +61 2 8094 1247, email us at or provide us with your initial information by clicking here.