What accountants/financial advisors should know before a client’s relationship ends.
An accountant or financial advisor is often the first professional to notice that a client’s personal circumstances are shifting. A request to change trust distributions, an unusual transfer between spouses, a sudden interest in valuing the business, or a client asking to add or remove a partner as a shareholder can all be early signals of a separation working its way through a client’s affairs. What an accountant does, or does not, flag at that point can materially change the outcome for the client.
1. Trust distributions are not automatically protected
A discretionary trust is not, on its own, outside the reach of a family law property settlement. The Family Court and Federal Circuit and Family Court of Australia look past legal ownership to whether a party has effective control of a trust, commonly through their role as appointor or trustee, or through a pattern of distributions that benefit them. Where a client has directed distributions toward a trust that a separating spouse could be found to control, or where a family trust holds the bulk of a couple’s wealth, this is a strong signal that family law advice should run alongside the accounting advice, not after it.
2. Restructuring after separation is a missed opportunity, not a fix
We regularly see business restructures, share transfers, or the addition of a new director or spouse to a company, that would have been straightforward to protect with a binding financial agreement or consent orders if done before the structure changed. Once a separation has occurred, the same transfer can be treated as a disposal of property that forms part of the asset pool, and undoing it is far harder than preventing the issue in the first place. If a client is restructuring a business at the same time as a relationship is changing, whether that is a new marriage, a new de facto relationship, or the breakdown of one, that timing alone is worth a conversation.
3. Superannuation splitting has its own technical traps
Splitting a superannuation interest as part of a property settlement is not a simple transfer of value. It affects preservation age, contribution caps, and in some cases the tax treatment of the receiving spouse’s benefit. Self-managed super funds add a further layer, since the fund’s trust deed and the trustee structure both need to accommodate the split, and a fund with only two members can face practical difficulties continuing to operate once a couple separates. An accountant advising a client on their superannuation position should flag a pending or possible separation to the client’s family lawyer before any fund-level changes are made.
4. Binding financial agreements protect the accountant’s own advice
Where an accountant has helped a client build a business, bring in a family member as a shareholder, or grow an asset base within a trust, a binding financial agreement entered before or early in a new relationship is one of the few tools that can protect that structure from being unpicked later. This is a natural point for a referral, since it protects the value of the accounting work already done, not just the client’s relationship.
5. What this means for a referral
None of the above requires an accountant to have family law knowledge. It requires only a habit of noticing when a client’s personal circumstances intersect with a structure the accountant is advising on, and making a short call before a decision is finalised, rather than after. A conversation at the right time, even an informal one, tends to produce a materially better outcome for the client than advice sought once a step has already been taken.
Get the family law referral trigger guide
Request our one-page reference guide for accountants and financial advisors on spotting family law issues in a client’s affairs, or the plain-English version for clients starting to ask questions about a separation. Call us on 1300 334 566 or email info@bcglaw.com.au to talk through a specific file, obligation-free.
