Managing your finances can be a daunting task, especially when it comes to deciding how to structure your assets. Should you keep everything in your own name, or should you consider more complex structures like trusts or foundations?

In this episode Warren Ingram begins by addressing a common concern: taxes. “Many of us are happy to pay fair tax. What we don’t want to do is pay unnecessary tax,” he says. It’s a sentiment that resonates with many, as nobody wants to overpay. But when should you start considering more sophisticated financial structures?

The answer, according to Warren, largely depends on the size of your assets and your long-term goals. “The moment the asset size starts to increase, it becomes a real concern,” he explains. This is particularly true when you have children and want to ensure that your wealth is transferred efficiently and safely to the next generation. “You don’t necessarily want a child of 15 inheriting an enormous amount of money with no controls around that,” Warren adds.

For those with substantial assets, a trust can offer a way to manage intergenerational wealth transfer effectively. However, Warren is quick to point out that setting up a trust solely to avoid taxes is not advisable. “If you’re simply doing it to not pay tax, you’re probably wasting your time,” he warns.

So, who should consider setting up a trust or foundation? Warren highlights that these structures are most beneficial for early founders or very early investors in high-growth businesses. “The only time I’ve seen it really work for someone who doesn’t have a lot of money is when there are early founders or very early investors in an extremely high growth business,” he says. For the average person, a well-crafted will is often sufficient.

Warren also advises seeking impartial advice from a tax advisor who doesn’t have a vested interest in setting up trusts. “Go and pay a tax advisor who’s not going to set up trusts, who doesn’t make a living from doing that,” he suggests. This ensures you get unbiased advice tailored to your specific situation.

If you’re unsure whether a trust or foundation is right for you, Warren recommends doing some reading. “There will be some great articles out there about the amount of money you need before it becomes viable for a trust,” he says. By educating yourself, you can make a more informed decision about whether to pursue these complex financial structures.

In conclusion, while trusts and foundations can offer significant benefits for certain individuals, they are not necessary for everyone. For most people, a good will and sound financial planning are sufficient to manage their assets effectively. Tune into our latest episode to hear more from Warren Ingram and gain valuable insights into structuring your financial affairs.