Prenuptial agreement promises tax-planning work

ACCOUNTANTS, tax planners and lawyers are bracing themselves for an avalanche of work with the December 27 announcement that pre-nuptial agreements had become law.

Before that date pre-nuptial agreements were not legally binding.

The law only applies to marriages and impending marriages. Defactos and same-sex couples have always been able to make similar binding agreements.

The agreements, also known as Binding Financial Agreements, will allow couples to plan how their assets will be separated if their marriage should break down.

Brett Davies Lawyers solicitor Paul Nitschke said it allowed couples to minimise the tax liabilities that would come from the dispersal of these assets.

“Orderly planning in advance could help reduce their tax liabilities,” Mr Nitschke said.

“If there is a transfer of assets there could be capital gains tax, income tax or stamp duty implications.

“It’s best these sort of issues are discussed early in the piece. Once the marriage falls apart, there is less interest in structuring for tax and more for just getting out – or worse, inflicting as much pain as possible.”

Jackson McDonald family law partner Rick O’Brien said people entering into marriage had access to new financial planning options.

“Those providing financial advice need to understand those options and appreciate that the legal requirements to take advantage of them are detailed and onerous,” Mr O’Brien said.

For the agreement to be binding, both parties have to receive independent legal advice.

A lawyer must certify that the necessary advice has been given.

Simmonds LeFevre partner Jacqui LeFevre said accountants would be the ones who would have to dig up the details on asset ownership, the purchase price and other financial information required for these documents.

“Accountants are in the box seat to know those details,” Ms LeFevre said.

“They will also have to educate their clients about these documents.”