Wealth is always dependent on many factors. Some promote its growth, while others are able to reduce it. The latter are thus risks that threaten assets in their substance or even in their existence. These include, in particular, taxes on property, such as inheritance tax or property tax. This should also include political risks, as they can also influence the size of assets. Furthermore, there are risks inherent in the assets themselves, such as fluctuations in value or complete physical loss. Other risks are related to asset management or asset protection costs. But then there are also risks that owners of assets carry on a personal level. For example, one can count the entrepreneur risk. This can threaten, for example, when starting companies abroad. However, other risks are also to be classified here if they have the potential to execute into the assets.

Assets should always be considered in context. So it depends on many factors that can influence it. Some of these are useful for its further growth, but many others can limit, diminish or even consume its value. Therefore, the analysis of assets with regard to potentially imminent risks is of high relevance. After all, a fortune once created should, if possible, continue to exist and usually serve further growth.

Since we are now dealing with asset protection, we should first consider what it should protect against. In fact, there are many risks that can reduce an already existing asset in its substance. On the one hand, we are dealing with taxes and other levies. On the other hand, risks are often in the personal environment of the wealthy. However, risks can also exist in the asset itself. Thus, we are dealing with multiple, interdependent levels of risk.

In fact, taxes are the biggest risk that can affect assets. So usually sooner or later in any case a transfer of assets takes place. This can be done either through a gift or an inheritance. Because we are talking about substantial assets, it should be clear that any allowances provided in this context do not offer too much help. At best, the tax rate should have a somewhat conciliatory effect on close relatives.

Also among the risks in the area of taxes is property tax. Although the last collection of a wealth tax took place for the assessment period 1996, a renaissance of the wealth tax is currently expected. In this context, we must also mention the possibility of introducing a capital levy.

Other levies may be proportionally less important, but they also have a wealth-absorbing effect. This includes, for example, property taxes on real estate or possibly motor vehicle taxes on extensive car collections.

In doing so, we have taken into account the material taxes on property as risks that may require asset protection for some. But there are also income taxes. However, income taxes do not affect the amount of assets already created. Thus, income taxes do not represent a risk before which asset protection would have to provide a defense. On the other hand, the increase in wealth is different.

In this context, a secondary aspect of tax risk still needs to be mentioned. This is basically about a separate risk category, but it has a strong influence on the risk tax. We have already mentioned the influence of policy on the tax risk factor. If asset protection is to be effective, he must also include such influences in his provision. In other words, a promising asset protection must also include an accurate analysis of the current and future realistic tax legislation on material taxes – both domestically and abroad. Because if you want to protect assets from substance taxes, you should look for a tax regime in which there is ideally no substance tax and these remain highly unlikely.

An example of this may be Austria. Although there was an inheritance tax in the Alpine Republic many years ago, it has now been abolished. Good conditions as a location for asset protection, one may think. At the moment, however, there is also a debate on the reintroduction of inheritance tax.

In addition to risks caused by legislative changes, there is also the risk that courts critically question existing laws and their application. Under certain circumstances, this can lead to indirect changes to the legal framework that influence the receipt of assets.

Another risk group is in some ways a paradox. This concerns the costs associated with asset management, but also with asset protection itself. Because asset protection, as much as it is necessary, also causes costs. Property protection without costs is possible in principle, but then you have to find a suitable treasure island and bury the treasure chest yourself. And even then, the protection of assets is anything but safe.

Ongoing costs can also threaten elsewhere, namely the maintenance and maintenance of assets. Homeowners know this very well. After all, the heating system alone requires annual maintenance and a roof must also be re-covered at certain intervals. Although this is ultimately related to asset management, such concrete costs often remain diffuse and therefore rarely come into awareness as a risk. But especially in the case of larger properties, which do not generate a return, but are purely speculative objects, this aspect is quite relevant.

The fourth area where asset protection should be effective concerns lump risks. Lump risks are all potential cuts that capital can reduce due to its characteristics. So this applies to assets that serve the current increase in wealth. Such lump risks can be real estate bubbles or strongly fluctuating stock prices, but also other misinvestments. In addition, the confidence that a tax regime does not impose a tax on its own assets constitutes a lump risk. We have already mentioned this briefly before.

Assets have a value that arises in particular through supply and demand. The definition of wealth is even the value of money that is given to a material or immaterial good. If the demand for certain assets falls, the value of the assets also falls. This can even go so far that an asset is still very valuable one day, but already worthless the next. Shareholders of Wirecard shares know what we are talking about here. But, for example, industries that may soon be outdated by future developments should also be included. Thus, the imminent loss of value, whether in the short, medium or long term, affects some assets more or more than others. Therefore, with a statistical value analysis you can minimize risk of loss of value preventively, but you can hardly exclude them completely.

Furthermore, entrepreneurs can risk their assets if they leave it without asset protection. If third parties demand legitimate services from an entrepreneur, this may affect the entire assets. This is why asset protection is often the primary motive for founding a GmbH. But even a GmbH that regularly saves high profits can be the subject of an asset-absorbing liability. Therefore, the establishment of a holding company from a certain company assets is just as useful.

What happens, however, when asset protection is not a priority, can be seen from the example of Anton Schlecker e.K. Because here a sole proprietorship fell into economic and as a result of its financial difficulties, so that in the end an insolvency occurred. However, since an individual merchant is liable within the framework of his company with all his assets and thus also the private assets (houses, cars), creditors are quite possible to enforce the private assets of a personally liable entrepreneur. Without asset protection, the free fall threatens.

However, entrepreneurial risk can also arise when starting a company. Especially when starting a business abroad, you should pay attention to any risks that entrepreneurs in their home country often hardly need to think about. For example, the mentality of the population as a new target group or the legal system and understanding of law abroad may differ significantly from what was previously known. Linguistic hurdles are likely to increase these risks even further.

The last level that we would like to address in terms of asset risk is personal. At this level, too, there are sometimes considerable risks. In doing so, we deliberately omit all personal risks that come from the area of entrepreneurial risks, although these of course also affect the personal level. Rather, we want to mention here such risks, which are of a purely private nature. For example, you can enter through a divorce. In such a case, a previously agreed segregation of property could constitute a preventive measure to protect against divorce-related claims. Furthermore, wealthy people can be affected by crimes that target their assets. Marriage fraud is just as much a part of this as tax evasion. At this point, however, you can also refer to the Wirecard file as an example. Furthermore, asset succession often requires forward-looking asset protection. Under certain circumstances, the question of a possible exclusion of a mandatory part of a potential heir may come to the fore.

As you can see, there are a variety of risks that can affect an asset. There is the overarching risk that the individual risks may be interlinked. If this is the case, this may lead to a cascade effect. Therefore, we come back to the statement that assets should always be considered in context – and this also includes the risks associated with the respective assets.

Of course, taking all risks into account is hardly possible. An absolute guarantee can therefore not offer any sophisticated asset protection. Nevertheless, it is important to look at this issue in depth. Finally, some basic measures can be taken to protect assets from imminent risks. However, as has just been pointed out, this often depends on the framework conditions in whose field of power assets stand. This includes in particular the composition of an asset itself. In addition, one can address at least the greatest risks, i.e. those that can affect the size of an asset the most. That’s why we recommend taking asset protection from as many potential risks as possible very seriously.