Legal Tip 189: Don’t listen to the Armchair experts on Family Law

Yep, common sense and extra knobs. Nah.

 

My friend used to call lawyers 'glorified librarians' as their skills were just knowing where to look to find something!

 

would be funny if she got charged,
I wonder if she still would say its not criminal

 

@Terry_w how about

When a marriage breaks down, a child maintenance trust can save you thousands

Organising your affairs into a cost-effective family tax structure is relatively common — but many professionals don't realise tax structures can help when the family relationship breaks down.
In fact, for professionals who find themselves getting a divorce, thinking early about how best to pay child support can see them legally halve the real costs by utilising a properly established child maintenance trust arrangement.

There’s no doubt that the breakdown of family relationships is both stressful and expensive, says Pitcher Partners’ Geoff Thompson, especially as the parent paying child support is paying the funds out of after-tax earnings.

But Mr Thompson says that by looking at restructuring the paying parents’ affairs and possibly transferring the funds to the children through a maintenance trust, people earning in the top marginal tax rates can keep payments high while reducing their tax burden.

The solution lies in transferring assets to the child or children via a trust, rather than just paying child support from personal after-tax earnings, he says.

Income earned from those assets by the children can — in many cases — then be tax free, increasing the funds available to younger members of the family.

“Normally income earned by a child is penalty taxed once it exceeds $416 in a year but in certain circumstances the tax law allows children to the pay the same rates of tax as adults,” Mr Thompson says.

“In other words, structured properly, children of divorced parents can earn the first $18,000 of income tax free and that money can be used to pay the child support.

“For many divorced or separated professionals a legal way to structure their affairs is to transfer units or shares in a professional practice service entity to a new child maintenance trust specifically set up so some of the family income is earned in that structure to provide maintenance for their children. The money earned by this structure can then be used to fund the child support payments as well as other living costs of the child.”

Child Maintenance Trusts
by Bill Jansen, Ernst & Young

A little known and used opportunity in the Australian Tax Legislation is the ability to establish a child support or maintenance trust (“CMT”) following a family breakdown. The provisions enabling such a trust to be established are contained within Division 6AA Section 102 AG of the Income Tax Assessment Act 1997 (as amended) (“ITAA”).

“Family Breakdown” is defined in S.102AGA to include legal obligations arising not only from the breakdown of live-in relationships but also where parentage has occurred outside of such a relationship.

A CMT is a trust set up to provide support for a child (or children) where there is an obligation to provide maintenance for the child, and income that is distributed to the child (or physically to the custodial parent) is taken to satisfy that obligation.

 

Yes they are great, but you need the capital to put into it and that ends up with the children

 

I read a recent case of a Australian bikie gang member who was jailed who studied law (but wasnt qualified and never will be admitted to practice !). He gave the inmates free legal advice and made hell for the justice system. Endless appeals and cases were lodged. Wasted a lot of costly court time and in the end many of the cases had poor grounds but it wasted time. He coached them on presenting their own case and so on.

So the DPP took action under the Legal Practitioners Act. In the end he agreed to not practice law and the case was dropped.

 

Many inmates are studying law. It's a great way to pass time I guess.