Why do I need an experienced Family Lawyer?
Many regard Family Law as a relatively simple and domestic branch of law. In particular, some think that Family Law property settlements only apply the Family Law Act and involve just sorting out which of the assets each party will retain after separation, usually with an argument over percentages. Others think that due to the wide-ranging powers of the Family Court, the name in which a particular asset is held is largely irrelevant. These are dangerous misconceptions, which can potentially cost parties many thousands of dollars. Take the following fact situation.
A couple have been together for 15 years. They have accumulated a number of assets (a home, investments, a business, cars, superannuation). Their accountant has arranged things tax effectively and to protect assets, so these are held by a variety of entities (the family company, a family trust, a self-managed superannuation fund and the parties themselves – jointly or as individuals). The card linked to the company bank account has been used for living expenses, school fees and holidays.
These are very common arrangements – and here are some “family law” problems which are often overlooked:
In such situations, there are frequently tax consequences when assets are transferred. A common error is to assume that stamp duty exemptions which apply to marital separations are applicable to all of their assets – if an asset is held by a company and transferred to a party, not only can there be stamp duty payable but a capital gains tax consequence may also flow. If a party leaves and decides to purchase a new home, the capital gains tax exemptions in relation to a residence can be affected. If a company is retained by one of the parties, outstanding loan accounts that remain on the books can trigger tax problems for the recipient, or for the company that forgives them. If dividends have been declared, whether they are franked (tax paid by the company) will be relevant, as will the income of the person nominated as the recipient. A careful examination of the asset holdings and the tax implications that potentially arise are essential if the true asset pool is to be ascertained and assets divided in such a way as to maximise the position for both parties.
Bankruptcy and company issues
What happens if the company is going badly? What if the Husband is potentially bankrupt? It is important to understand to what extent the parties’ personal assets are exposed and to what extent the Husband or Wife take precedence over creditors. For example, the rights of creditors can trigger issues regarding the potential need to repay the company for funds advanced to the parties to fund their lifestyle. It is also important to take into account and best utilise the carried forward tax losses in such situations.
Property and child support issues
What happens if the parties delay sorting out their family law assets, and one of them becomes involved in a defacto relationship, has another child or receives a generous inheritance?
If one of the parties dies before sorting out the assets, what happens? What if the assets were held in their name? Does the survivor have any rights?
Unfortunately, due to the many issues frequently relevant to a family situation, Family Law has become an area of increasing complexity, ranging far beyond the Family Law and Child Support Acts. As well as having the knowledge and sensitivity to deal with issues involving children, a competent family lawyer must have knowledge of defacto and marital property law, taxation law, company law, bankruptcy and succession law and be able to understand the interplay between these.
Most importantly, your lawyer must be able to identify and explain the issues relevant to you. Only then can you be in a position to confidently make decisions about the best way to progress your matter so that you can get on with your life.
Johnston Family Law will be able to guide you through the complexities of Family Law and get the best result. Call today on (03) 9070 9855 or contact us for an obligation free discussion about how we can help.