Breaking Up! – Relationship, Business Partnership, Issues To Consider!
Breaking up is never easy as the song goes…. So, consider the following
Home ownership – Where the main home residence is owned in joint names, it is important to consider the children first as the family law court will generally give priority to the children’s wellbeing. Forward arrangements will depend on the age of the children prior to age 18 or if full time students. Ownership may be approved for one partner over the other in exchange for no maintenance payments. This would be a legal negotiation and part of any settlement.
Finance to buy out a partner – This can be a difficult challenge if one partner is not working outside the family home. Or if both work but one partner earns more than the other. Banks would evaluate the finance position of the person wishing finance to buy the other out of the home ownership.
The percentage of ownership could be based on original ownership, length of the relationship/marriage, title holder, level of income etc. It might even be worthwhile to investigate a percentage split on the home ownership and title adjustment to make it easier to settle the relationship break up or divorce. An agreed ownership arrangement may allow more time for children to get to a certain age, or a business partner to adjust before the home or assets would be sold so parties can move on.
Living Expenses – Where one party has moved out of the home it is important to keep track of the child food costs, the costs of maintaining a home environment for children not to mention rates and repairs on the home.
Payment records are needed as to who pays the mortgage payments, and the itemised costs for any children involved.
This information can be used to negotiate the property settlement, a business settlement, child maintenance costs and any divorce settlement. It can be a surprise when one sees what the ongoing and total costs are for each child together with the other costs. Children from age 18 may be excluded from the cost considerations so be prepared for this
Educations costs – Educating children whether it be public or private schools, if agreed by both parents prior to the relationship break-up, can be given some tax benefit pending a ruling by the family law court. Evidence of advice and Financial Planning in relation to the budget planning for education costs, if presented to the court, can provide a win, win situation to both parents and the children. The result could be tax benefits pending a ruling, which can assist in covering the education costs for all concerned.
Investments and tax matters – Investments in a relationship or marriage, would generally be best in individual names. This would vary depending on the ownership structure whether via a business partnership, trust or other arrangement. Individual ownership would enable the owner to control when the tax liabilities of an investment could occur but would be part of the settlement agreement. It is relevant to weigh up any inherent capital gains tax of an investment prior to a settlement so that all parties share in the tax matters.
These same considerations are also relevant where there is a business partnership break up and may vary with the ownership structure.
Get advice before you break up or sign anything! …we can help. Please call 1300 655 096.