July 2025 - Matti Lamb & Associates

Transferring property between family members – key considerations

Transferring property between family members is a common practice, often driven by a desire to facilitate inheritance, support loved ones, or streamline estate planning. While the intention behind such transfers is usually rooted in familial bonds, navigating the legal and financial aspects of the process requires a practical and pragmatic approach. This article explores key considerations when transferring property within families, and flags the legal, tax, and financial implications involved. The information is general only and we recommend obtaining advice from experienced professionals that is tailored to your needs and circumstances.

Understanding the Motivation

Successful property transfers within families require effective communication and an understanding of family dynamics. It is important to clearly express the intentions behind the property transfer and address any concerns or questions that may arise.

Before delving into the intricacies of property transfers, it is also important to understand the motivations driving such decisions. By identifying the primary motivation, individuals can tailor their approach to the specific needs and goals of the family.

Legal Implications

One of the first considerations when transferring property between family members is the legal aspect. The method of transfer – whether through a sale, inheritance, will or gift – impacts the legal obligations and documentation required for the transfer. Each option carries its own set of rules and regulations that must be adhered to for a seamless and legally valid transfer.

Sales

Selling property within the family involves a formal transaction, and the terms should be clearly outlined in a legal contract, including the purchase price for the property. A sale within the family is often for a lower than market price. In such cases, consideration needs to be given to the impact on stamp duty and other obligations, as taxes are usually required to be paid on the full market rate. It is often necessary to have the property appraised to determine its value in current market conditions.

When selling property, capital gains tax (CGT) may apply on the profit earned. However, exemptions or reduced rates may apply. Understanding these tax breaks and planning accordingly can result in substantial savings.

Inheritance

If the property transfer is part of an inheritance plan, the most essential step is to establish a clear and legally binding will. The absence of a will often leads to complications and disputes among heirs, with the outcome that property may not be transferred as the deceased would have wished. Working with a qualified estate lawyer can help ensure that the transfer aligns with the legal requirements and the intentions of the deceased.

Some taxes may apply when receiving property through a will. Consulting with a tax professional can help optimise the transfer to minimise tax burdens.

Gifts

Transferring property as a gift involves giving ownership without expecting anything in return. While this can be a generous gesture, it is critical that the giver is aware of any tax implications. In addition to considering transfer duty, the donor should consider any CGT liability. Consulting with a tax professional can help optimise the transfer to minimise tax burdens.

In addition, a gift of property may not always be sensible if the recipient cannot afford the holding costs. Before transferring property, assess the financial stability and responsibility of the recipient. If the transfer is intended to support a family member in need, consider whether they can handle associated costs such as rates, maintenance, and other ongoing expenses.

Documentation and Title Transfer

Proper documentation is essential for a smooth property transfer, even when the transfer is amongst family members. To ensure that the title is transferred correctly and that all legal requirements are met, it is recommended to work with a lawyer or conveyancer. The correct legal documents in the prescribed format will be required for the transfer and registration of the property to the new owners. These need to be lodged with the relevant state titling authority. A property professional can also advise on transfer duty, investigate whether any concessions apply, and complete the relevant paperwork.

Professional Guidance

Seeking professional guidance from lawyers, conveyancers, tax advisors, and financial planners, as relevant, can help you navigate complex legal and financial landscapes. Their expertise can ensure that the property transfer aligns with both familial and legal aspects, promoting a smooth transition.

If you know someone who may need assistance or advice on how to proceed please contact us on (08) 8155 5322 or email [email protected].

Alternative dispute resolution explained

Litigation can be a costly and time consuming process and parties are increasingly seeking alternative forms of resolving disputes.

This article provides an overview of the main types of alternative dispute resolution (ADR) and their respective benefits and limitations.

What is ADR?

The term ADR is used to describe dispute resolution processes that do not involve traditional litigation procedures or final adjudication of a Court or Tribunal. The aim of ADR is to provide participants with a quicker and cheaper alternative to going to Court.

There are many different forms of ADR, including the following:

Mediation: involves a trained mediator facilitating negotiations, but with no authority to make binding decisions.

Conciliation: involves a neutral third party helping the participants to identify the issues in dispute, develop options and endeavour to reach a resolution. It differs from mediation in that a conciliator may offer an opinion or suggest a resolution. It has an element of advice.

Arbitration: involves a professional arbitrator who has the authority to impose a binding decision on the parties. An arbitrator’s award can only be appealed on limited grounds.

Expert Determination: is a process where an independent third party, with expertise in the subject matter in dispute between the parties, assists the parties to resolve their dispute.

Use of ADR

The commercial world has been seeking alternative forms of dispute resolution in order to avoid the costs of litigation and the executive time and energy expended on lengthy court procedures. Many commercial contracts contain arbitration, mediation or expert determination clauses making it a requirement that the parties commence an ADR process if a dispute materialises and as a prerequisite before commencing legal proceedings.

However, both the Courts and legislature have also driven the increasing trend of using ADR in order to try and alleviate the cost of litigation and the pressures of case management. This has further been encouraged by the obligation on prospective litigants in many jurisdictions to take ‘genuine steps’ to resolve their disputes before litigation is commenced. It is suggested that genuine steps include considering whether the dispute may be resolved before litigation through some form of alternative dispute resolution.

The advantages of ADR

ADR processes can deliver efficient and cost effective results which provide satisfactory outcomes for the parties involved. The primary advantages include:

the process is informal, quicker and cheaper;
it is a less intimidating process and parties can express their grievances without fear that their legal rights will be compromised;
ADR can remain confidential;
there is scope for non-monetary remedies; and
commercial relationships can be preserved by adopting a co-operating rather than adversarial approach.

The Disadvantages of ADR

The disadvantages of ADR include:

ADR might not be appropriate where a party requires emergency relief, for example, a court injunction;
agreements made at ADR may not be as easy to enforce as a Court or tribunal order;
ADR can be used as a delaying tactic; and
ADR is rarely successful unless all the parties to the dispute are committed to seeking to resolve the matter.

Conclusion

There are clear benefits to parties utilising alternative processes for resolving disputes. If you are considering whether ADR is suitable for a dispute you are involved in, we recommend that seek legal advice from your lawyer.

If you know someone who may need assistance or advice on how to proceed please contact us on (08) 8155 5322 or email [email protected].

What happens to a family business after a couple separates?

Divorce is almost always a difficult and disruptive life event. For couples who own a family business, the stakes are particularly high, as the fate of the business often becomes a central point of contention during divorce proceedings.

In Australia, a family business is considered part of the asset pool of the relationship, regardless of whether it was established before or during the relationship. Navigating the complexities of separating business and personal interests after separation requires careful planning and help from the right professionals.

Death of a Business

It is realistic to acknowledge that not all family businesses survive the upheaval of divorce. Some businesses may struggle to weather the financial strain and operational disruptions caused by the separation, leading to their eventual closure or liquidation.

Others may be irreparably damaged by acrimony and conflict between the spouses, making it impossible to continue operating in any meaningful capacity. In such cases, the spouses may be forced to sell off the business assets and divide the proceeds as part of the property settlement.

When this happens, the realised value of the liquidated business (if there is any) is simply added to the spreadsheet that tracks the total property pool of the relationship. The separating parties then need to agree on what percentage split each person is going to receive from the property pool. If they cannot agree then the Federal Circuit and Family Court of Australia will decide for them. In making this decision, the Court will consider things such as the length of the relationship, the contributions of each party to acquiring and keeping the assets of the relationship, and each person’s future needs.

Dividing a Living Business

If the business is to continue to operate, then the first step is to determine its value as a going concern. This can be a complex process, especially for businesses with significant assets, intellectual property, or goodwill. Valuation methods vary depending on the nature of the business and may involve assessing factors such as revenue, profits, market trends, and industry benchmarks. In some cases, forensic accountants or business valuation experts may be enlisted to provide impartial assessments of the business’s worth.

Once the value of the business has been determined, the next step is to decide how it will be divided between the parties. This can be particularly challenging when both spouses are actively involved in the business or have made significant contributions to its success.

The Court has broad discretion to make orders for the division of property. For instance, one spouse may be ordered to buy out the other’s interest in the business, either through a lump-sum payment or a series of instalments over time. This option allows one spouse to retain ownership and control of the business while compensating the other for their share of its value.

Alternatively, it may order the sale of the business and the equitable distribution of the proceeds between the spouses taking into account the distribution of other assets of the relationship (such as the family home or superannuation accounts).

While selling the business may not be in the financial best interests of either party or the business itself, the Court will make this order if it is the only equitable way to ensure that the property pool is divided between the parties.

In most cases, the Court prefers there to be a clean and final separation of all marital assets after the breakdown of a relationship. However, in some cases, the best option is for the spouses to continue operating the business together post-separation, either as joint owners or through a partnership or corporate structure. While this arrangement can be fraught with challenges, particularly if the spouses have a contentious relationship, it may be the best option for preserving the value of the business and ensuring its ongoing viability.

In such cases, it is essential to establish clear guidelines and protocols for decision-making, conflict resolution, and the division of responsibilities to minimise friction and maximise cooperation.

Conclusion

Ultimately, the fate of a family business after a couple separates in Australia depends on a variety of factors, including the value of the business, the contributions of each spouse, and the willingness of the parties to cooperate and compromise. While the process can be fraught with challenges and uncertainties, seeking the guidance of experienced legal and financial professionals can help couples navigate the complexities of dividing assets and planning for the future.

By approaching the situation with pragmatism, transparency, and a commitment to fairness, couples can mitigate the impact of divorce on their business and lay the groundwork for a successful transition to the next chapter of their lives.

This is general information only and you should obtain professional advice relevant to your circumstances. If you know someone who may need assistance or advice on how to proceed please contact us on (08) 8155 5322 or email [email protected].