Posts Tagged ‘plan wealth’

Plan for Success: Protect your Assets

October 22, 2008

Warren Buffett has said the time is ripe for buying into the stock market. Fear has driven prices low and we can buy now and wait for time to play its game again. Some companies are valued less than their cash value. Houses are available for cheap as mortgagee sales.

So if you are thinking of making the most of this time, then think ahead and plan for success. You want to protect your assets, ensure your returns are channelled in the most tax efficient manner and ensure you can pass the wealth onto your children (as wealthy, successful people plan to do). 

If you buy shares or property, what name are you buying them in? 

Your own name?  joint names? a company name?  a trust name?  
Do you know the ramifications of buying in each of these entities? (The laws differ by country so be careful with this).

You will need to talk to a professional about your situation, but here are some things to consider. What is the best entity to buy in for these situations?  

  • If your shares rise in value and you sell in 10 years time, you may have to pay capital gains tax 
  • You receive dividends on the shares over 10 years and you have to pay income tax – whose total income is being taxed? 
  • You receive investment property rental income which is liable for income tax, you also have capital gains if you sell it, and who would benefit if values do go up and you want to releverage?

Planning for success means planning for the life of your investments.
Think now about the best way to grow your wealth, and how your changing financial situation will be affected by growth in income and asset base. It is much easier to set structures up at the beginning and grow into them, than try to sell assets into them later (possibly triggering a tax event in the process). 

Wealthy, successful people plan their wealth. So even if the news looks dire at the moment, go see a financial planner about your financial future.

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