Head of Marketing | New Business, Lesley-Anne Walker talks of the importance of ring-fencing your high value assets; not just to protect your asset but also yourself.

Ok, so I am referring to a different type of ring than that sung about by Beyoncé, I am talking about a ring of the fence variety and when it comes to your most valued luxury assets, not having a ring-fence around them could result in undesired consequences.

Over the last decade, the perception of luxury assets as simply sources of pleasure for high net worth individuals has changed. Whilst traditionally a purchase of passion, they have now become recognised as an effective asset class for individuals looking to expand their investment portfolios; and some have even been seen to outperform your typical portfolios consisting of stocks and shares.

Now whether your luxury asset of choice is Real Estate, a Superyacht, a Business Jet, Supercar or a piece of Fine Art, all of these assets continue to have at least one thing in common – they are significant investments made up of time and money.

Consequently, it is advised that such assets be placed in appropriate ownership structures, normally in the form of a corporate entity or trust, instead of being simply held in an individual’s personal name.

So why is this?

Holding an asset within a corporate entity can offer a number of benefits, from confidentiality to asset protection, to the limitation of liabilities. However, it can also be effective for succession planning, in dealing with forced heirship issues and in some cases, it can provide tax and VAT benefits.

It is worth noting that different classes of luxury assets have different wider financial and liability implications, depending on their intended use, the type of ownership structure they are held in and when it comes to tax, the residence and domicile of the owner.

So what should you consider if looking to structure for a luxury asset? What type of entity should you use?

The answers to both questions are dependent upon the asset type in question, how and where it is going to be used and by who.

There are two vital stages to the effective structuring of a luxury asset. The first is to obtain appropriate professional advice to ensure that you don’t expose either yourself or your asset to any liability issues or implications.

Second, is the appointment of a respectable corporate service provider (‘CSP’) who can assist you with the establishment of your desired structure according to the professional advice you have been given.

Engaging a good CSP will ensure that any structure is set up correctly and efficiently, that any necessary statutory and administration requirements are met, and that effective ongoing management is in place to ensure that the structure remains fit for purpose and yields the desired results.

Not implementing these two crucial stages could have serious implications for you and any structure you put in place.

For more information on establishing effective structures for your luxury assets or to discuss your requirements in more detail, contact +44 1624 616544 or email info@sentientinternational.com.

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