There is only one type – bankruptcy!

If you become bankrupt this generally lasts 3 years. It can be extended if you do not cooperate with the trustee in bankrupcy or try to hide assets etc. Once this period is over you are discharged.

During bankruptcy you can often negotiate an annulment. This is often done by making an offer to creditors to give them some money in exchange for annulment. Money obviously comes from relatives etc as all your money will be seized. If your bankruptcy is annuled you are let out of bankruptcy which is better than being discharge.

Ramifications. Extremely hard to get finance while bankrupt and not much easier after being discharged. You cannot go overseas during bankruptcy without permission and you will lose various licences such as fin planning, mortgage broking, real estate, security clearances for govt jobs etc.

Bankruptcy will stay on your credit file for 8 years and you will often be asked "have you ever been bankrupt?" on various application forms.

Very hard to do.

Are you proposing to get sub-division done during your option period? or selling houses off the plan? How are you proposing to finance this?

But what if the $13k was used to pay down personal debt and then reborrowed…

Have you considered the Centrelink issues?

There could be 2 main ones

1. Selling could mean they have more cash then the threshold allowed which may mean a reduce or no pension.

and

2. Selling undervalue or gifting money would affect them for 5 years. Centrelink would deem them to still have these funds and be earning x% pa on them and this could affect their pension too.

Other issues

– capacity – do they have enough capacity at this stage in their life to understand such a transaction? Could there be allegations of undue influence or unconscionability

– siblings – how well do you get on with them, would they have any objections

– banktupty – what if you went down? greater asset protection if you left the house as is and used it as security maybe

– family law – what if your marriage breaks down?

– disputes over the estate – what if some later disputes the estate. The transfer to yuo could be wound back in some instances.

– CGT – keeping it with the parents would mean tax free capital gains.

– land tax – same

– receiving it via the estate could be so much better, especially if they left it via a testamentary trust and you have children..

Wife doesn't work and the managed funds are in your name? Does wife have an income?

Sorry, I must have misread up above.

If you are only taking money from an offset account then there would be no tax issues.

Nope.

I am a CTA – chartered tax advisor, solicitor and a broker though. Fin planning soon.

Thanks Derek, but I am many things but am not an accountant.