Can the words ‘divorce’ and ‘asset protection’ be used in the same sentence?
Like any partnership, marriage can come to an end. It is certainly a topic that is hard to directly discuss up front. However, when spouses do call it a day, we’ve see far too often the collateral damage which can occur when matters like this are not planned for.
Tougher economic times can lead to financial stress, a leading cause of divorce in Australia.
So when it comes to making sure your assets are protected should you go through divorce, here are a few key things to note:
You can’t hide your assets in divorce
- The family court will see everything, your spouse know what you have and where it is hidden,
- Trusts are a grey issue, sometimes they can be excluded, or just assessed for the income, not the assets they hold, however you can’t simply move assets into a Trust before deciding to divorce
Myth number 1: My assets are in a Trust or in my Super, therefore they’re protected. Not true, as the Family Court will have access to companies, trusts and superfunds.
Myth number 2: ‘We are not married therefore, no problems.’ If you live under the same roof for at least 6 months - the courts will determine you are in a de-facto relationship which is treated under the Family Court.
On legal matters
- A good lawyer here is invaluable, don’t find the cheapest around, a specialist in Family Law is invaluable.
- Don’t throw good money after bad, in the emotion of getting your fair share of the marital assets. Ensure that you have good advisors who can logically let you know when to concede. Too often, experiences exist when the biggest benefactor for the divorce split is not the spouse or children, but the lawyers.
- Keep your accountant directly involved all the way, to help get the right information you need to your legal team. This can save you thousands in legal fees as they try to interpret a blurred picture.
Time to review structure
When the smoke clears, it is a good time to review your structures and estate planning, superannuation beneficiaries, and insurance.
- You will not want all your hard earnt assets accidently passing to your ex-spouse because you forgot to update your beneficiary details on your super.
- Protection of your children - testamentary trusts or blood lines trusts become very good vehicles to look at to ensure that the new partner cannot seize control of assets in the event you have passed away, diluting what is left for your kids.
- Most assets in divorce can be transferred to respective spouses with No Stamp Duty, however key to note you cannot change assets from your name into trusts or companies and get stamp duty exemptions
Divorce is a contentious issue, however PJT are here to review your financial position if you are to go through one. You can schedule a no-obligation consultation with our family and business structure experts here at PJT by using this form or call us at (07) 5413 9300.