Commonly parties are mistaken as to what is property and what is not property. Property includes assets brought into the relationship that were acquired by one party beforehand. Property can also include assets acquired after separation. Property can include property overseas, property in a deceased estate, an inheritance as well as superannuation, household contents, real property, funds in bank accounts, shares, trust assets and royalties.
Property may include property received in advance. An example is where, on separation a party removes funds from a bank account. The amount of those funds can be treated as an advance on that party’s property settlement and therefore form part of their overall settlement outcome.
Liabilities are also considered and the fact that a party says that money is owing, does not necessarily mean that it will be treated as a debt of the relationship. Examples may include monies advanced by family members where there is uncertainty as to whether the money was gifted or lent and if lent, what the terms were of the loan and what amount was repayable.
If the money is found not to be repayable then it may be a contribution on the party’s behalf if used towards acquiring, conserving, maintaining or improving an asset of the relationship.
Many liabilities are straightforward, for example income tax, payment of credit cards, mortgage repayments and the like. Other liabilities may be vaguer or more uncertain, such as capital gains tax.
Depending on the facts of the case and the evidence, capital gains tax may or may not be taken into account as a liability. If an investment was sold then the CGT liability is crystallised, and that liability would be taken into account.
Sometimes one party may take an investment asset and there needs to be a consideration as to the potential likelihood of the property being sold in the near future, how that property would be used in the future, i.e. will it continue to be an investment or perhaps be used as that party’s home, and advice needs to be sought from your family law solicitor and an accountant/financial planner about capital gains tax and capital gains tax roll over relief.
Some other potential liabilities such as stamp duty if assigning the family home between the spouse parties may not necessarily be a liability as it may attract the stamp duty exemption if the property is transferred between the spouse parties pursuant to family law orders or financial agreement.