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Often during the course of property settlement, it is suggested by one or other of the parties that one way of resolving the matter would be to transfer some of the property available for division between the husband and wife to a child of the marriage or the relationship. Transfer of property to a person other than a spouse will in most circumstances attract the requirement to pay stamp duty on the value of the property being transferred. Transfer of property between husband and wife or de facto partners is exempt from stamp duty under State and Federal Legislation.
Child Maintenance Trust
In respect of minor children it is possible to incorporate in the settlement between the parties what is known as a Child Maintenance Trust. This is a Trust that can be an effective way of providing financial support for children following Divorce or breakdown of a de facto relationship. The Trust can be established when the marriage or relationship has broken down and the parents agree on the purpose and terms of the Trust. Each parent must have a threshold income level and the Trust must be capitalized by a payment of at least $200,000. There are significant tax advantages attached to the Trust.
Adult Child Maintenance
In some cases there are children of the parties who have reached the age of 18 years but who require further assistance. This can arise in a number of circumstances but those typically will occur when there is a need for adult children’s periodic maintenance. The Court can order periodic maintenance to be paid by a parent in respect of an adult child (over 18 years). The maintenance is required:
In some cases there is an adult child/ren who is disabled and who has always been cared for by their parents and who will always need the care and financial support of their parents. In this case it is possible for the parents to set up what is called a Special Disability Trust which is a type of discretionary trust but with distinct reporting and audit requirements. The parents will need to balance the right of their adult disabled child to Commonwealth pension benefits with the financial benefits that the Special Disability Trust can provide.
The factors which would weigh in favour of the setting up and capitalisation (payment of money to establish the trust) would be:
If you are contemplating setting up a Child Maintenance Trust or Disability Trust and want to ensure that that is the correct course of action for your child or you seek advice on the possible transfer of property (being part of the asset pool) to an adult child/ren please telephone Richard Watson Senior Family Law Solicitor or his assistant Shereen Da Gloria to discuss your matter so that you have clarity as to the best course to adopt to benefit your child/ren.
This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.
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