The Federation Press

Risky Business

What happens to personal assets when business fails?


People going into business often obtain advice from professional advisers about how to structure the business. For example, should they operate as sole traders, in partnership, through a company or through a trust? Some professional advisers, especially accountants, have been known to recommend a structure based on tax minimisation and nothing more. That advice is not always consistent with a sound asset planning strategy.

This book analyses different structures from the perspective of asset planning. It reviews the legal system in Australia with a view to answering the question what happens to personal assets when business fails?

One specific question addressed is what happens to the family home if an entrepreneur becomes bankrupt.

The book offers a road map for professional advisers who face questions from their clients; questions like:

  • Is money in my superannuation fund safe?
  • What about the assets of a discretionary trust of which I am one of the beneficiaries?
  • What happens to gifts made before I went bankrupt?
  • Does the Family Court have a role to play if there is a relationship breakdown?
  • Can my relatives change their wills so that their money goes to family and not to my creditors?
  • And also, for the professional adviser, what are the legal and ethical obligations in tackling these issues?

This is not a text book, although there is some technical material included. The intention is to offer the professional adviser guidance in clear, non-technical narrative, on issues that are sometimes complex. The intention is also to alert advisers to matters they might not have considered when advising their clients.


Risky Business shows how the law deals with [the] issues that commonly confront advisers, and how the law also leaves some issues to the winds, with ‘only’ ethics as guidance. Peter Agardy’s readable and knowledgeable account contributes to the on-going debate of the issues involved. - Michael H Murray, From the Foreword

...This work provides the busy legal practitioner, accountant and financial planner with an understanding of structuring options available, their features and how these options have been tested and treated by the Courts... - Anthony Lo Surdo, SC

Peter’s book fills a long standing void in the asset planning market. It meets the needs of both the layperson wanting to implement legally prudent and effective asset planning strategies, and professionals wanting to understand the broader legal and regulatory environment from which asset planning strategies are launched... - Gess Rambaldi, Partner, Pitcher Partners

Table of Contents

Part A - Introduction - Identification of the problem
Asset planning
Risky business

Part B - Structuring
Structuring options
Testing structures
Multi-disciplinary approach

Part C - The insolvency system
Purchase of matrimonial home
Bankruptcy Act 1966 (“Act”)
Trustee in bankruptcy claim to property
Controlled entities
Resulting trust
Constructive trust
Mortgage payments
Powers of trustee in bankruptcy to avoid antecedent transactions
Statute of Elizabeth — without bankruptcy

Part D - Some specific topics, testing the system
Diverted benefits
The discretionary trust
Family Court

Part E - Ethics

Part F - Some available options and pitfalls
Proper advice and scope of retainer

Part G - Conclusion and checklist

Of interest...