Divorce and separation are already difficult periods of life, so having to worry about how you can best protect your assets is just another stress-inducing matter to think about. A common misconception is that the partner who stays in the house after separation has a better chance of keeping it when it comes time for a property division. This can lead to a ‘stand-off’, increasing conflict and making the situation more stressful for everyone involved.
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.
A common criticism of the Australian Family Courts is that they are too expensive. Running a family law matter all the way to a final hearing can cost more than $100,000 per party, an expense that many separating families can simply not afford. The lack of access to the court system resulting from the significant financial costs means that vulnerable parties are forced to accept a less-than-ideal settlement.
- 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.
If you are having problems receiving your entitlements after a family law property settlement or parenting matter, you have clear remedies if Court Orders are in place. See here our blog post on the importance of Court Orders in this context.