hi guys
merry xmas to all.
Just a general question, regarding the the tennants in common investment property ownership in the case of a divorce.Assume all the properties are acquired after marriage, the title for the properties are tennants in common abd deliberately have one party a very high % ownership due to tax reasons , the other party a lower percentage. the contribution to the portfolio buidling is about 50/50.
in the case of a divorce, the split of the assets will not be based on the % indicated in the title , am i right ? It maybe based on some other factors depends on the situations ( generally speaking, half and half ) , but either ways, the fact that the tennants in common with one party a very low % should not be a serious concern for a married couple. Is this assumption correct ?
It will be based on title unless one party makes application for the courts to make a property settlement.
I advise against 99% 1% ownership in most cases. Owning one percent of a property is pretty pointless. Consider the effects on borrowing too.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Property- divorce = trouble. I have been through a divorce and a break-up (defacto relationships). It is an absolute nightmare when you own multiple properties. I had properties in my own name, Company, trusts including discretionary & Unit trusts and SMSF. It does not matter in the least who’s name they are in and/or who owns what. Literally whoever has the most assets in their name will lose. The Family Law Courts just slice through all the jibba jabba of these Trusts. I would always settle out of the courts because a judge and lawyer will costs u min $150K to settle it for you and trust me, whoever is the richer partner will lose the most. 50/50 is the easiest no matter who owns what! Also, keep in mind some properties will incur huge CGT when sold and a judge will not take this into account when distributing proceeds btw you both. Best to sell-up, both of you distribute the CGT and start again. Goodluck!
When the courts make orders to rearrange ownership of property they do take into account who owns the property and who has paid for it. But they also take into account non-financial contributions.
So some investment structuring strategies could work against you in a family law dispute. One strategy is for spouses to keep finances separate and to buy property in single names. Where X buys a property and Y makes no contribution to the deposit or to the loan, or to the repayments and has never helped in renovating the property etc then the courts are more likely to favour X in such a situation.
There are exemptions for CGT on the transfer of property as a result in a relationship breakdown. If title is transferred CGT may not be triggered now, but the recipient (transferee) will be liable on the full amount when the property is later sold. So as Blackhotel says you have to take into account the future CGT liability on any property settlement.
And, trusts can help in some situations, it all comes down to how they are structured. I think one recent case is Morris v Morris where the spouse attacked a trust of which the husband was a beneficiary, but failed to have the trust assets treated as property of the marriage. it was still a financial resource though.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You must be logged in to reply to this topic. If you don't have an account, you can register here.
