TAX EFFECTIVE DIVORCE

How Can I Achieve a Tax Effective Divorce?

 

A separation often entails the transfer of property interests and a change in business structures, with a view to severing financial ties that otherwise exist between de facto partners and spouses.

There are numerous ways to achieve such an outcome. 

Where:

  • a review of business and ownership structures go hand in hand with a personal separation;
  • there are significant tax and stamp duty concessions available to separating couples;

a separation often creates a financial opportunity to restructure existing property and business interests which if done correctly, can save thousands of dollars in stamp duty, capital gains tax, or even income tax.

For example, if appropriate, child maintenance trusts can potentially benefit both parents post-separation, as the tax savings created by such a structure can deliver comparatively higher returns of income net of tax, thereby growing available resources to support the parents and their children in the future.

There are specific restrictions on the use of this kind of trust, including requirements as to what property can be used and what is to occur, once the trust ends. It follows that the use of such a trust requires careful consideration, but such trusts are one potential tool available for separating couples that creates a financial benefit for one or both of them.

It also follows that in our experience, financial ties are best severed via bespoke carving, not hacking.

To see whether a child maintenance trust or other restructuring options would suit your circumstances, please contact us to discuss.

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