Fraud Blocker

Building Wealth Through Property Investment in Australia.

Article by WealthSafe.

Date Published: 22 Feb 2023

You’re a 9-5 worker and of course feel that you’re stuck in a rut.  You feel there is no way for you to earn more than what you have now unless you get another job.  You feel the same way as most of us do.

Building WealthWhat you need to remember is that there are ways to build wealth.  In building wealth, we need to consider two issues:

  1. How we generate our wealth. This examines issues of wealth creation such as building businesses, developing cashflow strategies, and investing in shares, properties and other growth assets
  2. How we keep and manage our wealth. This examines issues of money management, reducing expenses through cost savings, tax minimization, and most importantly, preserving our wealth from plunder by unscrupulous people with their success hungry lawyers, purported creditors and government agencies

Let’s look at the “strawman” and “person of substance” method to protect your assets.

The Strawman and Person of Substance

A great strategy for married couples or business partners in certain situations

Man of straw is at risk of attack, and sign their name to everything. They are the company director, trust appointor, signatory to risky deals

Person of Substance is not at risk and signs their name to nothing, yet controls all the assets

So the man of straw is at RISK. But controls NOTHING.

The person of substance is NOT at RISK. But controls EVERYTHING.

How does this work practically?

Using a TRUST to protect assets

Trusts are wonderful vehicles to save tax, protect assets and create estates for your family for many generations. Trusts are wonderful structures because as well as protecting assets, they can significantly reduce your tax.

There are various types of trusts. The main trusts used in business are discretionary trusts and unit trusts. There are also hybrid trusts (which are a mixture of discretionary trusts and unit trusts).

Family discretionary trusts are an ancient way of building and preserving wealth. Indeed, trusts have existed since medieval times. Family discretionary trusts protect assets because no-one actually owns the trust assets, ie. the Trustee holds the assets on trust for a number of beneficiaries and can give the assets and income to whoever the Trustee desires at their discretion. They are a tremendous vehicle to use in business or investment.

The parties to a standard family discretionary trust are:

  • Settlor. The Settlor creates the trust
  • Trustee. The Trustee holds the assets for the benefit of the Beneficiaries and manages the trust
  • Beneficiaries. They benefit under the trust.
  • Appointor. The Appointor is the puppet master; the Trustee is the puppet. The Appointor ultimately controls the trust with most trusts.
  • Guardian. The Guardian controls the Appointor (although in virtually all trusts the Guardian and Appointor are the same person in the trust)

The Trustee is the PUPPET. The Appointor is the PUPPET MASTER. The Appointor can SACK the Trustee at any time.

For asset protection, the Appointor and Guardian of the Trust is the “person of substance” and the Trustee is the “man of straw”. Therefore, the Appointor and Guardian should be the person of substance, or an entity controlled by the person of substance, while the Trustee should be the man of straw, or an entity controlled by the man of straw.

It is common with family trusts (and highly recommended in most cases) that the trustee be a company. The reason is it creates an extra “firewall” of protection between your creditors and your assets.

The director of the trustee company, of course, should be the “man of straw”.

Still confused? We would be happy to help you with your questions. Contact us at [email protected] or call us at 1300 669 336.

At Wealth Safe, we’re here to help you with all your asset protection, tax planning, business structuring and superannuation needs. We work with you to find the best strategy to keep your assets safe, slash your tax 100% legally, and put more money in your pocket.

Please feel free to visit us at our Facebook page at for more interesting articles, and tricks to reduce your tax and protect your assets.

To contact us, and get your complimentary copy of your book on how to slash your tax and protect your assets, complete our web form by clicking here. Or call us at 1300 669 336. One of our staff will be glad to assist you.

Book Your Free
Tax Saving Assessment.

Wealth Safe

Related Articles

View more tips & insights