An accountant can be incredibly helpful in assisting parties during a Family Law property settlement and may assist the parties in reaching an agreement without recourse to litigation. The following are examples of when an accountant’s expertise can be beneficial in such proceedings:
As part of property settlement proceedings, a Court will consider the financial position of both parties at the commencement of the relationship, during the relationship and following separation. Often parties commenced their relationship many years ago (often longer than the 7 year period that financial records are required to be kept for), and an accountant may be able to assist in determining a party’s financial position at that time. For example, relevant documents may include tax returns, Notices of Assessment, details of any shareholdings, historical superannuation balances and other documents confirming the net financial position and income of each of the parties both at the commencement of and during the relationship.
It’s important to remember that an accountant is not obligated to provide a party with the above information as part of Family Law property settlement, particularly if the accountant no longer acts for or has never acted for the party requesting the information/documents. Although parties to property settlement proceedings have a duty to disclose relevant documents, such documents are not always forthcoming. Should this occur, there are other avenues to obtain relevant documents, such as issuing subpoenas after the commencement of Court proceedings. This step should not be taken lightly and should only be exercised where the requested material is relevant and has not been forthcoming from the other party.
2. Entity structures
It is not uncommon for one party to adopt the “financially savvy” role within the relationship, particularly where there are corporate structures, trusts and/or shareholdings involved. Often the other party (or perhaps both parties) have limited knowledge about these structures/interests or their intricacies. The parties’ accountant can often assist with providing financial records of those entities and explaining how any entities may be related and the value that they may hold. Should the parties be unable to agree as to the value of an interest, the parties would ordinarily appoint an expert valuer to have the interest valued.
3. Taxation implications to a proposed property settlement division
Property settlement often involves sale or retention of assets such as investment properties and / or businesses. However, if one party is to retain these assets, they may be liable to pay Capital Gains Tax or face other taxation implications at a later date that should be identified and addressed in the property settlement process. An accountant can provide advice as to the tax implications of a proposed property settlement division, and the advantages and disadvantages of certain arrangements and division of property. They can also provide advice as to taxation risks when agreeing upon a property settlement, and how such risks may be mitigated. Should you and your former partner be amicable and co-operative, your accountant can assist you both, and your lawyers, to identify the most tax effective way for assets and liabilities to be divided and in a manner that still meets your respective financial goals.