Complex property matters
- Big money cases
See Special contributions.
Except in unusual cases, all assets and all liabilities of both parties are taken into account when altering interests in property between parties under family law following separation. (That doesn’t mean that everything is shared equally – net assets are divided after consideration of each party’s contributions and each party’s future needs – see How are property issues resolved?)
In the context of family law, interests in companies or businesses can give rise to many issues including in relation to value, valuation methodologies, goodwill, enterprise and personal goodwill, minority interests, shareholder loan accounts, accounts and records, accounting and recording methodologies, notes, depreciation, forecasting, budgets, management accounts, group structure, asset character, history, shareholder agreements, governing documents, remuneration, expenses, relationships, roles, responsibilities, premise of value, market, acquisitions, historical value, strategic benefits, adjustments, risk, key clients and employees, economic cycles, core and non-core assets, premises, debtor and creditor issues, tax issues, finance issues, leave entitlements, asset-backing, work-in-progress, off-balance sheet items, covenants and/or contract issues.
There are many cases dealing with company and business interests and related value issues. Rather than listing those here, you might prefer to phone 9222 8000 and to ask about your particular circumstances or the circumstances of relevant business interests.
Questions commonly arise concerning whether trust assets can be included in consideration relating to family law property settlements.
Section 79(1)(a) of the Family Law Act provides for the court to make orders “with respect to the property of the parties to the marriage or either of them – altering the interests of the parties to the marriage in the property”.
As a general proposition, where a party is one of a number of potential beneficiaries under a discretionary trust, where there is no pattern or history of distributions from the trust to that party, and where the party has no control over the operation of the trust or the discretion, the assets of the trust are not likely to seen as property that can be taken into account when making an order altering the property interests of the parties to a marriage under family law (see Whitehead (1979) 5 Fam LR 308).
Where a party to a marriage can effectively treat assets of a trust as their own or has some element of control over those assets, the trust property can be treated as property of that party under family law (see, for example, Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 and Ashton (1986) 11 Fam LR 457).
A trustee cannot generally be directed to act in a manner that is not consistent with the trustee’s duties under to the trust deed or in a manner contrary to the due administration of the trust (see BP and KS  FamCA 1454).
Section 80(1)(e) of the Family Law Act says the “court, in exercising its powers under this Part, may do any or all of the following…appoint or remove trustees”. This would generally only occur where the assets of the trust can be treated as property for family law purposes (see above) and the court cannot generally vary the terms of an existing trust.
In the context of family law, taxation considerations can give rise to many issues including in relation to prior transactions, recording and reporting accuracy, penalties and interest, setting aside past transactions, prospective or retrospective effects, company, business or trust, structure reorganisations, rollover provisions and relief, allowing for presently accrued liabilities (including CGT), concessions and exemptions, stamp duty, deemed dividends and Division 7A issues, trust issues, trust resettlement issues, income entitlement issues, accumulations, distributions, known and unknown transactions, disclosure and investigation issues, transactions that may give rise to uncertain tax outcomes, rulings, determinations and private rulings, consideration issues, valuation issues, CGT events, capital losses issues, timing issues, depreciating assets, trading stock issues, capital allowances, individual, company and trust interactions, inter-entity arrangements, franking and double-counting issues.
Each family law matter should be examined carefully so as to identify any potential taxation issues and the right expert advice obtained.
There are many cases dealing with taxation and related issues. Rather than listing those here, you might prefer to phone 9222 8000 and to ask about your particular circumstances or the circumstances of relevant business interests.
Valuation issues can be important in family law matters. One of the most common causes of difficulty in Family Court conciliation conferences is valuation issues. If the parties hold significantly different views about the value of a significant asset or assets, this can make reaching settlement more difficult. (See Case assessment conference and Conciliation conference.)
Valuation issues can be resolved by compromise, via the use of a single-expert (see Single-expert) or by a judge with the assistance of a report or evidence from a single-expert or a shadow expert (see Shadow-expert).