With a recession looming, now is the right time to protect your assets

Dominique Grubisa
Dominique Grubisa

Published 10:06 am 1 Oct 2019

Facebook Twitter Whatsapp Linkedin

Storm clouds are forming over the Australian economy. With annual economic growth at its lowest point in a decade and trouble brewing internationally, many experts believe a recession is on the way. Whether or not that happens, now is a great time to lock in an asset protection strategy to keep your assets safe. DG Institute Founder and CEO, Dominique Grubisa, explains more.

Australia has a something of a knack for sailing through economic trouble when the rest of the world is flailing. While the United States and other parts of the world fell into recession after the dot-com crash and the GFC, Australia maintained positive growth thanks to strong exports and healthy domestic consumption. In fact, the last time Australia recorded two consecutive quarters of negative growth – the technical definition of a recession – was 28 years ago, way back in 1991.

→ EMERGENCY Webinar Briefing on How To Safeguard Your Wealth While You Profit Safely

But now a perfect storm of economic factors has many economists worried. Experts including former Prime Minister Kevin Rudd believe a recession could be just around the corner, with devastating impacts for all types of Australians.

Top of the list of indicators for a looming recession in Australia is our recent poor economic performance. Figures released by the Australian Bureau of Statistics in September show Australia’s annual GDP growth rate – a measure of our productivity – dropped to just 1.4 percent at June 30. This was its lowest level in 10 years. Then there were the figures for domestic consumption – one of the driving forces of the economy. Household spending grew a measly 0.4 percent in the June quarter, while housing investment slid back a whopping 4.4 percent. Add to this stagnating wage growth, rising unemployment, and record levels of debt among Australians and you have big economic problems. In short, we’re spending less, pumping less money into the economy and increasing the chances of negative growth.

External Factors

The situation is made more perilous by a complex international situation. As Federal Treasurer Josh Frydenberg recently put it, the local economy is facing “significant headwinds, both international and domestic”. The US economy is widely tipped to soon slide into recession following its longest expansion ever and a damaging trade war with China. And as the old saying goes, ‘when the United States sneezes, the world catches a cold.” Meanwhile, the economies of Germany and the UK are already contracting. If a global recession hits, Australia may not remain immune this time.

If we do indeed slide into recession, no level of Australian society is likely to emerge unaffected. The stock market is likely to dip, affecting the investments of mum and dad investors – and their superannuation. There are likely to be far higher levels of unemployment, placing stress on individuals and families. In the 1990 recession, the jobless rate hit 10.8 percent. Those lucky enough to be in work will need to make do on lower wages and reduced family incomes. There will be a reduction in business opportunities for entrepreneurs and the big end of town, and businesses will close. Typically, real estate values fall. There will also likely be a spike in repossessions and forced sales as people struggle and then fail to make mortgage payments on their properties.

It’s a frightening prospect if you have worked hard to buy a home, accumulate a nest egg and make an investment or two. Often, all it takes is the loss of a source of income, a business failure, or a lawsuit for our financial empires to come crashing down. In such cases, people often have their entire wealth stripped away – a devastating prospect, particular in the second half of life.

The problem lies in the way that we structure our wealth. A good 98 percent of the Australian population holds their assets in a manner that leaves them vulnerable to being plundered should things go wrong. Whether we own our houses and valuables in our own names or through a company or family trust, the nature of our legal system means a decent lawyer or accountant will take only a matter of minutes to identify the money trail and to begin stripping assets away.

But there is a way to protect our assets that secures them against being stripped away in the event of financial catastrophe. DG Institute’s Master Wealth Control program teaches you about a concept developed over a century ago by the Vesteys, one of Britain’s richest families. Through brilliant accounting they devised a system whereby their assets were safe from both private and government accountants seeking to plunder them. Read our article on how trust can be used to protect assets to find out more.

Asset Protection Strategy: The Vestey Trust

While you are free to enjoy your assets and utilise them to make money, you become a very small target if someone tries to take those assets away. 

For example, take the area where most Australians invest their wealth: property. In the event of a catastrophic financial failure, creditors and liquidators may try to seize the equity an individual holds in their house to pay creditors. But what if there is no equity in the home and nothing for liquidators to seize?  

The Vestey trust system works by establishing a special trust that creates a superior layer of protection Because the caveat is placed on the title when times are good, it takes priority over subsequent claims by liquidators in times of distress. 

To learn more about asset protection, register now for our emergency webinar briefing where you’ll learn how to safeguard your wealth while you profit safely.

Frequently Asked Questions

What is a Vestey trust?

A Vestey trusts is a form of asset protection that aims to stop your hard-earned assets, like your home, savings or shares, being stripped away from you in the event of a financial crisis or ‘black swan’ event. It was first developed by Britain’s ultra-wealthy Vestey family who used the structure to make themselves impregnable to attacks by creditors. In essence, it involves turning yourself into a very small target with the intention of stopping would-be creditors from attacking your wealth. This strategy is designed to provide inter-generational wealth protection

How to set up a Vestey trust?

The principles behind the DG Institute approach are simple. When an individual goes bankrupt or runs into serious financial trouble, their creditors typically line up, eager to extract their pound of flesh. Certain creditor types and those with the longest standing claims often get their money first, with smaller creditors then arguing over what is left. Our Master Wealth Creation strategy involves creating a trust that is controlled by you but not owned by you, and which places a claim over all your assets. Should you fall upon hard times and should your creditors try to claw back money, they will find a pre-existing claim on your assets that overrides their own claims.

Does the Vestey trust still work today?

The Vestey trust system used by the DG Institute today was pioneered in the 19th and 20th centuries by Britain’s wealth Vestey family (who actually called the system the Paris Trust). It proved incredibly effective at stopping those who wanted to strip wealth away from the family’s massive empire. The system remains relevant today. When carefully set up with help from DGI Lawyers, it offers individuals the ability to safeguard their wealth from those who would strip it away, not only for now but for future generations.

What is the best asset protection strategy?

Many people turn to conventional trust structures to protect their wealth, hoping that by separating ownership of assets from control they will be able to hold off creditors in times of crisis. Sadly, it is not an effective approach as creditors and others are generally able to establish a connection between the trust and the beneficiaries and raid the contents. At DGI, we believe our Master Wealth Creation strategy achieves what other trusts promise – delivering a legal and effective way of protecting wealth across generations.

MWC Webinar Banner


Good Debt Vs Bad Debt With Dominique Grubisa - DG Institute

Lawyer, Asset Protection Specialist and Property Educator

Dominique Grubisa is a practicing lawyer with over 25 years experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author.

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

About DG Institute

Founded in 2009, DG Institute strives to empower everyday Australians to grow and protect their wealth. Our goal is to provide direction, motivation and inspiration to our clients and help them perform at their very best. We do that through our professional services, in addition to teaching them how to grow their wealth through property and business education.

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

You May Also like to Read

Climate Change to Cost $25 billion in Damages to Australian Households

Is your suburb at risk of facing climate-related damages in the future?  Over the past twelve months, Australia’s...

What Are Asset Classes?

Knowing what the various asset classes are is a prerequisite for any budding investor or business owners. So, let’s take a...

Caveats On Property Explained

Often considered the “red flag” of real estate, here is everything you need to know about Caveats on properties.  A...

Australia’s About to Break This COVID-19 Record

Australia’s lauded COVID-19 strategy is wearing thin.  Australia has been the envy of the world for most of the...

Will Australia Go Into Another Recession?

With more than half of the country now in lockdown, the threat of another recession looms over Australia.  Prior to...

Sydney Lockdowns Extended: Here’s the Support Available

Sydney’s Lockdowns have been extended for a further 4 weeks - and that might be just the beginning. Here’s the support...