High Court affirms asset protection strategy – one rule for husbands, another for wives — Brown Wright Stein Lawyers | Sydney Lawyers - Tax Specialist Lawyers, Corporate & Commercial Lawyers..

A common asset protection strategy for professionals and "at risk" individuals is to put the family home in the sole name of their "non-at-risk" spouse to protect the property from creditors.

This relies on an ancient principle known as the 'presumption of advancement'. In a bygone era, any amount paid by a husband to or for the benefit of his wife, was presumed to be a gift (unless there was evidence of a contrary intention).

In Bosanac v Commissioner of Taxation [2022] HCA 34 Bernadette Bosanac successfully defended a claim from the ATO that her interest in her home, which was funded by joint borrowings with her bankrupt husband, could be used to satisfy the husband's tax debts. In other words, the ATO asserted that Bernadette held 50% of her interest in the home on trust for her husband who had helped fund the purchase of the home. Critically, the presumption of advancement in this case was also supported by evidence of the dealings between Bernadette and her husband that showed the parties objectively intended Bernadette to be the sole owner of the family home. The husband was merely facilitating the wife's purchase of that property.

The lessons are:

the presumption of advancement is from a husband to a wife (or a parent to a child) and not available for payments from a wife to a husband;
it is critical that the intentions of the parties are documented contemporaneously;
a documented gift from a husband to a wife may suffice to evidence a gift without needing to rely on the presumption;
asset protection is not a stand-alone factor – it must be balanced with estate planning, tax and commercial considerations.

If you or your clients would like help with balanced asset protection estate planning and tax structuring, please contact Suzie Boulous or Rachel Vijayaraj.

The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.