Successor Director

Protect the control of your companies with a Successor Director.

Recently we’ve been giving a strong focus to Asset Protection and Estate Planning for all of our clients.

A key part of that is to ensure that you maintain control of any companies you are a Director of if you are incapacitated in any way, or if you die.

The Problem

Single Director Company

If, as a single director of a company, you are incapacitated and cannot act as the director or if you die – without a properly drafted Will and company Resolutions – your business may not be able to operate and your staff may end up not being paid. This could have disastrous effects on your business value.

Multi Director Company

If, as a part of a multi-directory company, are incapacitated and cannot vote on issues to protect your family interests – the remaining director(s) could make decisions to benefit them and not your family. This could cost you a lot of money and impact your family financial situation.

The Solution

Upon setting up a successor director solution for your companies, you will be assured that if you are incapacitated or die, then your successor director is instantly legally allowed to take your place as a director of any companies you have nominated in the documents that we will create for you.

This ensures the protection of control over the assets in all your companies and your trusts which have trustee companies.

Who should be a Successor Director?

In most family groups, one person will be the “risk taker” and the other will be the “asset holder”.
The risk taker will be the company director, and the asset holder would normally be the successor director.

But once the asset holder is officially appointed as a successor director, then any assets in their personal name become at risk.

Does the Successor Director have assets in their name that might become exposed?

Right now, before the Successor Director becomes an appointed director of a company, you need to prepare and asset protection review of the successor director and put into place asset protection strategies for them.

If the successor director holds any properties or valuable assets in their name, they should consider implementing the “The Protector Plan” to protect their assets.

Using “The Protector”, you can protect the value of a successor director’s property assets without them incurring stamp duty or triggering any capital gains tax payable.

There are 3 key steps:

Establish a Family Protection Trust (a Leading Member Discretionary Trust with a Leading Member Company as Trustee).
The successor director can gift their net equity in their chosen assets to their new Family Protection Trust.
The successor director’s Trust then provides an immediate loan back to them of the net equity amount and
takes security over their assets (e.g. a registered mortgage over a property) to provide protection for the loan.

The end result is that the successor director’s net equity in the assets that they choose is now held by their Family Protection Trust and is not in their name.

With little or no assets in their personal name, most Lawyers would not bother trying to take legal action against a successor director, because even if the lawyers win the successor director does not have any assets in their name that could be taken as a legal settlement.

Next Steps

We will prepare and action legally binding documents to nominate a Successor Director.

Give us a call on 03 5911 7000 or email at reception@smartbusinesssolutions.com.au to get started.

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