Divorce: Is it Necessary to Document the Property Division Deal?0
When a couple decides to separate, decisions of course must be made about the division or disposal of assets and liabilities.
For some, the stakes and/or the emotions run so hot and high that nothing can be resolved without the assistance of Lawyers and Courts. For others, the mutual desire to keep things dignified and amicable can mean that they are able to work out how the division should be done without the need to consult a Lawyer at all. For the couples who are able to separate cooperatively therefore, the question begs, do we need to have anything documented at all and if so what are the options?
Generally, there are at least four reasons why formal Family Law documentation should be prepared and as for the documentation options, there are three choices to consider:
Reason #1 – No come back – Once proper Family Law documents are prepared and executed, each spouse is free to go off and live their life (make or break their fortune etc) without the need to be constantly looking over their shoulder in fear that their former partner might change their mind and start the legal processes for a re-division of the assets on more
Reason #2 – Enforceability – With proper documentation, both spouses are locked into the deal meaning neither can subsequently refuse to carry through with the required transactions (sale of the home, payment of money etc) nor suddenly introduce additional demands (more money etc) in return for their continued cooperation to carry out the terms of the deal.
Reason #3 – Stamp Duty Exemptions and Capital Gains Tax (CGT) Rollover – If the family home or an investment property is to be transferred into one spouse’s name alone, that transfer is stamp duty free (saving $000’s) if it is done pursuant to a recognised Family Law Agreement. CGT is not charged on the transfer/sale of personal residences but for investment properties, even a transfer between the spouses will trigger an immediate obligation for payment of CGT (which can run to $000’s) if there is no recognised Family Law Agreement in place*.
Reason #4 – Superannuation Splits – If the deal involves one spouse transferring part of their personal accumulated superannuation account to the other spouse, that transfer can only happen if authorised by proper Family Law documentation.
If readers of this article are interested to know about the documentation options for a properly recognised Family Law property division agreement, please feel free to go to our website www.zandelaw.com.au for the balance of this article.
*Importantly though, the tax liability carries forward with the property (it is not zeroed out) and consequently will still be payable if/when that property is subsequently sold at any time in the future.
Michael Zande is a Queensland Law Society Accredited Family Law Specialist with over 25 years’ experience in the field. He is the principal at Zande Law Solicitors, Suite 7, Norwinn Centre, 15 Discovery Drive, North Lakes. To contact Michael for advice, phone 3385 0999.
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.