For the kids ...

Discussion in 'Legal Issues' started by qak, 4th Nov, 2019.

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  1. qak

    qak Well-Known Member

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    If separated parents agreed that the family home (in name of only one parent) is to be transferred to a trust (presumably fixed) with only the children (minors) as beneficiaries, could there be family law implications if one parent decided to later challenge this? Should this be part of a property settlement?

    I think there's other potential costs/issues that haven't been thought about (CGT will be $nil, stamp duty, land tax, losses in a trust, borrowing capacity, ongoing costs).

    Could there be any stamp duty exemption (NSW) for this type of transfer - would direct to the kids be better than to a trust? If transferred to the kids as part of a property settlement can they be assessed at adult tax rates on income?

    The intent is to ensure that the property goes to the kids, and to avoid the potential issue of new partners of either parent interfering with that arrangement (ie a Will probably won't work as it could be rewritten at any point in the future). Is there any other/better way to do this?
     
  2. thatbum

    thatbum Well-Known Member

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    Almost certainly yes. This sounds like a terrible idea frankly.

    Why wouldn't you (or whoever this is) just do a normal property settlement with the associated rights and obligations in caring for the children?
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Plenty of family law implications. Legal advice from a family lawyer should be done before anything happens.

    But perhaps a tax lawyer should be the first point of call. Consider a CMT, child maintenance trust, as there are many concessions on income tax, CGT, duty etc.
    However, would you be happy giving away your property to your children who might become party to their own family law property settlement at some point?
     
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  4. Trainee

    Trainee Well-Known Member

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    Too much focus on the family home as some special emotional thing and not on the flexibility the kids might need in the future imho.
     
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    There is also probably a loan secured by the home, which will have other implications.
     
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  6. Stoffo

    Stoffo Well-Known Member

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    I doubt very much that this is related to the Family home....:rolleyes:

    I have been having a similar dilemma to the OP :eek:

    Lets say I kick the bucket, I am more than happy for my other half (married or defacto makes now difference) to move forward with their life, to find someone else to be happy with :D

    What I don't want is all my years of hard earned and carefully managed wealth going to that other party after a 6 month relationship :mad:

    I want that wealth to be used to put a roof over my partners head for the rest of their days without risk of it being taken o_O

    With it all eventually being dispersed as per my wishes after my partners eventual passing (when reunited below:p)

    *I have a friend who divorced and settled, in addition, rather than pay child support a house was bought in trust for the kids to live in until the youngest reaches 21yo and they then get to decide how to divide the asset :cool:
     
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  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You are misinformed if you think 50% of your assets will be lost to a spouse after a 6 month relationship.

    There are various strategies that can be used to ensure that the property goes to the right person after death and these might entail
    - contractual wills
    - life interests/life estates
    - trusts
    - options
    - transfer prior to death
    - multiple spouses
    - waiving rights to make claims
    - gift and borrow back strategy
    - joint tenancy

    and my favourite:
    - outliving partners
     
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  8. Trainee

    Trainee Well-Known Member

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    Death opens up a lot more options tho.
     
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  9. qak

    qak Well-Known Member

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    This is the motivator and people are known to change their minds when circumstances change!

    Hopefully there are lawyers that can do both? Any suggestions welcome - Sydney/south side.

    That might depend on how much $ you were talking about!
     
  10. thatbum

    thatbum Well-Known Member

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    Eh I personally find it a bit odd that you want so much control after you're gone. I mean if you're entrusting your estate to someone, does it really matter what they choose to do with it if you trust them?

    I mean there might be things you can do it implement that sort of thing, but they would come with some considerable costs and side consequences (as well as having no real guarantees against being challenged).
     
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