 Hi, everyone, and welcome to the first ever virtual property show. My name is Bruna Simao, specialist property attorney at Bruna Simao Attorneys and Intergyn Wealth. This is my business partner, Shili Boy Mutiba. Hi, everyone. My name is Shili Boy, as Bruna introduced me. I'm executive and co-founder of Intergyn. I specialize in property tax at Intergyn. So thank you for joining us today. The point of today's conversation is to discuss a very important principle that sometimes people don't think about when deciding to create wealth. Now wealth creation is something that a lot of us are interested in and there's a lot of companies out there like the Property Academy, for example, that focuses on giving you the tools to create the wealth that you need for retirement or to pass on a legacy to your family. But a very important principle, and sometimes where money slips through the cracks, is your wealth preservation. This is where you try and retain that wealth for as long as possible so that you make the best use out of it. You pay as little tax as possible. You make sure that your assets are protected and you make sure that you're structured in a way that works for you. So with this in mind, what we try and do is we try and look at the legal principles and apply them to how these investment structures work. Now one of the biggest problems that I tend to find is people do tend to complain about the way that our law is structured. The protections, how it favours, for example, SARs and the taxes that you pay. What you need to understand is these laws exist. And if you want to be a smart and savvy property investor, it's not about fighting the laws, it's about working with them to make sure that your property journey is made as easy and as optimised as possible. So the first thing that we start looking at, I don't jump in and start trying to explain the different vehicles to you because you need to understand why these vehicles are in place before you actually decide on the vehicle that you're going to use. So you'll see from the slide over here that we make mention of three principles. It's asset protection, tax efficiency and financing optimisation. Now these are the core values and the core principles that we use when trying to structure a person's investment structure or property investment structure. The reason why we focus on these is there has to be a balance between them because if you lack that balance between these three core principles, you will unfortunately be hampered or hindered somewhere along your property journey. So just to give you a brief explanation or definition of these three principles, when we speak about asset protection, we're speaking about being able to isolate your assets, isolate them and ring fence them from exposure. So situations like this, for example, is when we suggest that you don't keep assets in your own personal name and we'll explain why in a short while. You try and move them into companies or vehicles that don't carry as much exposure so that if for some reason something goes wrong and creditors start trying to attach some of your assets, you've at least separated them and ring fence them to keep them safe. Tax efficiency, Shilibu will go through in quite some detail a little bit later on. Where we start looking at short-term tax planning, long-term tax planning, what the implications are, what the benefits are and again, how you can find that perfect balance to suit your own needs. Lastly, we look at financing optimization. Financing optimization deals with the ability of using these investment structures to be able to get as much external financing from banks, banks for example, other property investors, you name it. And we'll also quickly touch on how best to do this so that you can obviously get that external money so you can build your portfolio as quickly as possible. Now with that being said, now the discussion of the vehicles becomes important because this discussion is where we learn what vehicles exist, why they exist and how we can actually use them to benefit us in our investment journey. So as most of you know, a lot of people and we meet a lot of people that have bought properties in their own personal names. By buying a property in your own personal name, there are a lot of downsides to this. So I'll give you a quick example. A person that buys a property in their own personal name but for example, runs a business in their own personal name has now effectively exposed the business to the property investment and the property investment to the business. So it's things like this that you want to try and avoid. So our general suggestion is that you try a place as little as possible in your own personal name and actually try and move it to one of the other vehicles that we have here at Trust or a company. By moving these and isolating them and ring fencing them, you've at least got a level of asset protection behind this. Also remember and Shilibu will touch on this, you as a natural person have unfortunately a limited lifespan and because of this limited lifespan, when you pass away, a number of things need to happen and generally it means that you need to move these assets from your name into the name of your children or your spouse or your parents, whatever the case may be. And because of this, there's certain costs associated with that. So this is also something that you want to try and avoid and where the long-term tax efficiency planning comes in. All in all, buying your own personal name sometimes has benefits but for the most part the downsides of the trade-offs, the negative trade-offs outweigh these. A trust and a company, we normally use combinations of these in order to try and optimize the investment structure. What people normally don't understand is they ask us the question should we buy in a trust or should we buy in a company? It's not a question of which one you should buy in as much as it is why you're buying in these. So a trust, as far as we're concerned, is always the fundamental structure that we use. Why is that? Because a trust offers a level of asset protection that a company generally doesn't. Remember, as a company shareholder, the shares still form a part of your estate. So even though you own the company and the company has ringfenced that property within its name, the problem is those shares haven't been ringfenced because you're owner of those shares. And that's why we use trusts. We either use trust to own the properties directly. There's some benefits to that. And there are some benefits for the trust to actually own the shares in the companies and let the companies trade and the trust sit as a holding structure effectively, holding these shares and not necessarily overly trading in its own name. So a trust offers this protection mainly because the way that a trust holds assets, it doesn't belong to the beneficiaries. The beneficiaries don't necessarily have a vested right in those benefits until the trustee says so. So those assets remain safe unless, of course, the trust in its own name has debt and exposes those assets, which is, again, from a structuring perspective, strategically something that we tend to try and avoid, and this is where professional advice comes in to try and assist. Also remember, trust in a company for the most part, or not for the most part, a trust in a company continues in perpetuity, meaning that it never dissolves unless the shareholders decide to dissolve it. So the benefit to this is, whereas as a natural person, you pass away and have to move the assets onto somebody else, a trust in a company doesn't have to do that because you simply replace the shareholders or you replace the beneficiaries with new beneficiaries. And by doing that, you get into a situation where you never have to pay those costs when you pass away, it just continues. And your children benefit, your wife benefits, your parents benefit, whoever you need to benefit, you structure it properly within this investment structure of yours. All right, so now to look at this in some detail. So we discussed asset protection, we briefly defined it. So what would it look like if a person dedicates the energy solely to asset protection and nothing else? So I created this little matrix at the bottom, basically trying to explain to you that if a person dedicates a little too much to asset protection, your structure would look very similar to one property per structure. So for example, you've got a company and one company has one property and you keep repeating this cycle over and over and over. But you'll see that if you opt to do something like that, you start losing a lot of the benefits from the financing optimization. Reason being, for example, that when a bank does the assessment of a company and starts looking at the company as a business, as an operating business and it realizes that all these specific companies are individual and it looks at one of them and realizes there is no income. It isn't an actual fully-fledged functioning business. And because of this, your financing optimization, your financing efficiency tends to disappear. So again, that's why it's so important to reach the perfect balance between the three because unless you're doing this intentionally because you're not looking for external funding and you're actually looking only at protecting your own money and using your own money for investments, you need to lay off a little bit on the asset protection just to offer a little bit more room when it comes to financing efficiency. And the way that you do this, for example, is finding the balance. What a lot of my clients suggest is pool certain assets together in one company. Let them run as a functioning business so that the banks will see this and appreciate this. But don't group high-risk assets with lower-risk assets because you obviously still need that level of asset protection. So there are smarter ways of structuring this to suit your own benefits. So if we just go through a couple of examples, we look at situations like divorces, for instance, car accidents, a range of things that happen in your personal life that you can't really mitigate all that much because you can't do it through a company, through some sort of entity. Now, what everyone needs to remember is that a company, for example, is its own juristic person. What this basically means is that if a company incurs a debt, it does so in its own name. And the shareholders and directors of the company won't be liable for this debt. However, like you'll see from the financing efficiency, the banks normally when buying properties will expect you to sign a surety-ship agreement that'll bind you personally to the debt of the company, but short of that, for the most part, for example, you hire contractors.