Family trusts are like an insurance policy. Among other benefits, they are designed to protect you from an adverse event, if and when one happens. It's obvious that we don't know what those 'events' could be for you. We hope they never occur.

They may never happen and if they do, the effects may only be minor. On the other hand, one could be so devastating to you, your family and your life, that it could have a permanent affect on you, your assets, your cash-flow and your happiness. Family Trust Asset Planning is the process of devising asset ownership structures for private and business assets. The aim of an effective asset plan is to arrive at a structure that provides a mix of asset protection, effective estate planning, tax minimisation and caters for any relationship property considerations.

When setting up a family trust, you can avoid serious financial loss and stress in the future by considering each of the asset planning areas below:

1. Asset protection describes taking measures to protect your assets from personal and business risk. For example, if you have a business with five employees, you do not want to see your family home lost if the negligence of an employee causes a claim to result against the business.

2. Estate planning looks at how assets are to be distributed from one generation to the next. To illustrate, would you want to pass your assets to your son or daughter only to have their partners take half in a matrimonial split?

3. Tax minimisation speaks for itself. While we all recognise an obligation to pay our fair share of tax, we are also allowed to structure our affairs so that they are efficient from a tax perspective.

4. Relationship property issues are always relevant. In some cases the solution is straightforward, but in others, structures need to cater for spouses or de facto partners wanting to maintain separate assets.

Setting up a trust can be more involved than may people realise. And while some life events that can occur can be predicted, it's the events that we don't even see coming that can affect us. These 'left field' events especially in the area of relationships and business events that go wrong, could potentially cause real problems.

When considering forming a family trust, be sure that your accountant or lawyer has taken these 4 important areas into consideration. A holistic approach looking at your wider financial affairs and relationships is what's required for financial protection and peace of mind.