Australia has become very cosmopolitan and as a result it is now not unusual for a person to own property in Australia and also in an overseas jurisdiction. In such circumstances it may well be necessary to prepare "an Australian Will" for a client and ensure that such Will does not revoke another Will which the client may have made in an overseas jurisdiction. It is important that careful consideration is given to such matters to ensure that the testator's wishes are carried out and that the administration of the estate is not unduly complicated.
Capital Gains Tax and property divorce settlements
When finalising property settlements it is important that the lawyers give consideration to the detail. For instance an Application for Consent Orders made to the Court or a binding Financial Agreement have to be carefully worded to ensure that parties receive the stamp duty exemption which they were anticipating and the parties need to be made aware that although Family Law Orders and Financial Agreements may provide rollover relief with respect to Capital Gains the party receiving a property in the property settlement may well with it, receive the ultimate responsibility to pay Capital Gains Tax on the disposal of the property. It is important that full consideration is given to these matters and that the Orders or Agreement accurately reflects the parties' bargain.
Stamp duty exemptions
It is important that the client does not receive any "surprises" in the property settlement. For instance, while a properly worded Family Law Order or Financial Agreement may well assist a client to obtain a stamp duty exemption upon the transfer of a property to themself in the property settlement, it will not prevent the State Government seeking reimbursement from the transferring party, of a portion of the home transfer duty concession afforded to the parties, if they have not fulfilled their obligations required for the receipt of such concession. Thus a party transferring the family home within twelve (12) months of purchasing same, may well be required to reimburse a portion of the transfer duty concession received by the parties.
Who pays Capital Gains Tax?
Capital Gains Tax is something that must be carefully considered when finalising a property settlement. This is especially the case if only one of the parties is the registered owner of a property on which there is Capital Gains payable and such property is to be sold pursuant to the property settlement. In such circumstances, care must be taken to ensure that the calculation of Capital Gains Tax payable, is taken into account in the property settlement.
Divorce and Trusts
Trusts present particular challenges to solicitors when assisting their clients to formalise their property settlement. It is important that the Orders or Financial Agreement not only deal with the transfer of a parties' interest in the trust to the other party, but also that the Orders or Financial Agreement ensures that the party who is transferring their interest in the Trust, cannot later enforce a distribution previously made by the Trust under the tax laws.