corporate KATE PATEMAN | DIRECTOR | KLP FAMILY LAW
PROTECT YOUR PROPERTY TOO FEW PEOPLE THINK ABOUT HOW TO SECURE THEIR PROPERTY IN THE EVENT OF A BREAK-UP… UNTIL IT’S TOO LATE. In Family Law I am often asked ‘Can I still purchase assets even though we have not yet done a property settlement?’. And while the answer is an easy ‘Yes’ there are potential pitfalls in doing it wrong. How can you purchase an asset incorrectly you may ask? Well, that is the one question rarely asked or thought about until it is too late.
“IT IS BEST TO DO IT RIGHT THE FIRST TIME AND NOT WAIT UNTIL THINGS GET BAD.”
No matter when a property is purchased you need to think about how you should purchase it because how you purchase a property may impact on how it is considered in a Family Law property settlement. I’m talking about how it is owned and by what entity, for example as joint tenants, tenants in common, in one spouse’s sole name, in a company’s name, in a trust’s name… The option you choose should depend on what you are trying to achieve but most people don’t give any thought to that question and I always wonder why. After all, it is a business transaction and owning an investment property is a business – we derive taxable income from it.
Putting it another way – when you purchase the property you will be taking out home insurance, right? Why? Because while you don’t expect the property to be blown away by a cyclone you get the insurance anyway to be on the safe side. So why would you not get an insurance policy, like a Binding Financial Agreement, in case there is a relationship breakdown in the future? Granted, you don’t go into a relationship expecting it to end but too few seem to think about an insurance policy in case it does. And forget about transferring or buying the property in a friend or family member’s name – the Family Courts have long arms and can scoop those assets back into the pool of assets or determine that the property is held on a constructive trust for you. The Courts have seen it all before.
So it is best to do it right the first time and not wait until things get bad and then think about how you can try and ‘hide’ the asset. This is why it is crucial to plan ahead and, before buying that property, speak not only to your accountant, but also your Let’s start thinking about it as a business. When thinking of a family lawyer. It’s the best way to ensure you retain that property, business, we can all agree there are very few business transac- especially if you are entering into your second, third or fourth tions that are not held together with a contract between the relationship. parties. Now consider this – when we purchase the property we enter into a contract with the seller don’t we? But do we enter into an agreement with the other legal and/or equitable owners? Rarely.
You need to consider whether you should enter into a written agreement about how, in the event of separation, that property will be taken into account and divided… not that any of us want to think that there will be a separation.
DUO MAGAZINE JUNE 2013 duomagazine.com.au 83
Published on May 31, 2013
DUO Magazine is North Queensland’s very own luxury lifestyle publication. Now in its seventh year, the independent glossy has secured a plac...