Business Succession & Asset Protection

The business structure of any small or medium enterprise (“SMEs”) plays a critical role in successful succession planning.  To the extent possible, the correct business structure should be chosen at the outset, taking into consideration factors such as:

  • implementation and administration costs;
  • governance and management issues;
  • taxation concerns;
  • asset protection;
  • sale achievability; and
  • succession.

Sole proprietorships and partnerships involve personal liability and are also likely to be subject to tax consequences in the event of the death of a sole proprietor or partner, where their share falls into the estate of the deceased. For these reasons, these types of business structures are, in modern times, not as common.

As an alternative, private companies or discretionary family trusts, are often selected as preferred structures in which to hold business interests.

For example, a structure (with asset protection elements) for a simple business could be as follows:

  • the business assets such as land, intellectual property are owned by a family trust, and a corporate trustee is appointed;
  • since a structure (say, a company) will be incorporated to trade and conduct the business, owning business assets in a different entity is often a prudent strategy to quarantine those assets from the trading (and often risky) activities of the business;
  • the shares of the trading company could be owned by a discretionary (family) trust and the dividends then pass to that trust where they can be distributed at the discretion of the trustee;
  • succession in the case of the corporate trustee takes place by gift of shares, while nomination provisions for successor appointers of the discretionary (family) trust can be inserted in the appointor’s will; and
  • the benefits of capital gains tax rollovers can be utilised in this type of business structure.

At Burke Lawyers, we, together with our partners, are qualified to provide legal advice and services relating to your business structures, asset protection and succession planning (particularly important during the current COVID-19 outbreak).  For more information, please contact Meghan Warren, Principal or Rosy Dean (nee Rosy Roberts) on,, and  respectively, or by contacting our office on +61 3 9822 8588.

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