Liz Koh: Best ways to hold and grow assets

'The assets you own are your store of wealth.'

As your wealth increases, there may be benefits from using different forms of ownership.The assets you own are your store of wealth. These can include your home, investment properties, bank deposits, KiwiSaver, superannuation funds, investment portfolios and businesses.

When you are starting out in life, it is easiest to purchase assets in your own name but for most assets there are other options. Ownership options for personal assets can include:

Individual ownership. Your assets are held in your name and you are liable for any tax payable in relation to the assets. Upon your death they will pass to your estate.

Joint ownership. You share the ownership of the assets equally with another person or entity. On your death ownership transfers to the surviving person or entity. Tax liability is shared by the owners.

Tenants in common. Two people own a property in equal shares or shares of different sizes, for example, 60 per cent and 40 per cent. If one owner dies, that owner's share passes on to whomever they choose.

Family trust. This is a legal way for you to hold assets for the benefit of you and your family over the long term. The assets are owned by trustees for the beneficiaries (usually you and your family). There are many reasons to consider a trust, which are mostly aimed at protecting your assets from creditors, the threat of estate duties and relationship property claims.

For business assets, ownership options include sole trader, partnership and limited liability company. As your wealth increases, there may be benefits from using different forms of ownership. It pays to think ahead and decide on which ownership structures are best suited to your circumstances, because changing the ownership of assets can be costly.

Tax, estate planning and asset protection are all important considerations. Your solicitor and accountant can advise you on the options.

Liz Koh is an authorised financial adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free by calling 0800 273 847. For free e-books see moneymax.co.nz and moneymaxcoach.com.