For a Court to make a just and equitable decision about how a property pool is to be divided, it must first know what there is to be divided, which is often referred to as the “net asset pool”. To work out the net asset pool, parties must either agree on values of each asset and liability in the pool or, if an agreement cannot be reached, must prove to the Court that their asserted value is accurate.
A family trust is usually set up by families who want their assets safeguarded and can provide tax benefits, protection from individual liability, inheritance and investment purposes. The trust deed is the legal agreement that will govern the trust’s operation, binding terms and conditions and role of the parties involved. A trustee manages the fund and has the power to decide which beneficiary/s receives the trust’s net income and capital gain and a settlor acts as a third party that hands over assets to the trustee on behalf of the beneficiary.
Since the onset of the COVID-19 pandemic, there has been a marked increase in urgent Family Law cases as a direct result of the current climate, with the Courts reporting a 39% increase of cases in the Family Court of Australia and a 23% increase of cases in the Federal Circuit Court of Australia over a four week period in March and April 2020.
Buying your first home is very exciting but the majority of people don’t take into consideration a number of things when buying their first home.
- The recent case of Sandini demonstrates the circumstances in which a transferor spouse may be exempt from CGT when transferring property to their former spouse under family law orders.
- Family lawyers must have a well-grounded knowledge of the tax implications of property transfers and should not hesitate to obtain single expert taxation advice when required.
- Care must be taken when drafting family law orders, as simple mistakes can have significant tax consequences for parties.