Couples generally (and should) financially plan for their future – from buying a house together, budgeting for a family, and putting money away for their children’s future.
But what happens when a family breaks down?
How are housing, food, clothing, school costs and other child needs paid for?
Nobody really plans for family separations in their future, or starting a child maintenance trust, but it’s imperative that you do.
Why? Read more from Crest Accountants, on the importance of starting a child maintenance fund in the midst of a family breakdown
What is child support and who has to pay it?
Child support is a payment made by one or both parents to the other, to assist with the cost of looking after the children. It’s paid for children under the age of 18.
For this reason, child support is more common than child maintenance.
Who pays child support is dependent on many factors including:
- If the parents have a sole or shared custody agreement?
- If there’s Informal or formal arrangements in place between parents,
- If an application is lodged for a child support assessment through the Department of Human Services, and more.
What is child maintenance?
Child maintenance, on the other hand, has a similar principle and purpose, but it’s paid for the costs of children over the age of 18.
Whether it’s navigating the process of child support and child maintenance, your Gold Coast Accountant and Financial Planner can help you provide income for your children in a cost-effective way.
An Australian Tax Law loophole
Commonly, income earned by a minor is taxed at the highest marginal rate once it reaches and exceeds $416 per year. However, by transferring assets to the child or children via a trust, the first $18,000 of this money is income tax free.
The terms and conditions of a child maintenance trust fund:
- The trustee must be a parent of the child/ren who benefit,
- This parent must no longer be married to their spouse, and
- A court order, child support assessment or agreement must be in place that requires the parent to pay the child support/maintenance.
Also, the money, securities, real estate and/or life insurances in the trust fund and under the law, can earn additional income over time.
Divorce and family relationship breakdowns are often a gruelling time. It can also be expensive, but it doesn’t have to be with your accountant and financial planner guiding you through the instabilities and unknowns of family breakdowns and finances.
We’re here to show you more about safeguarding your children’s future and the importance of child maintenance trust funds. Let us help you avoid some of the unnecessary costs of divorce and family breakdowns.
Consulting with your Gold Coast Accountant for financial advice is a smart way to provide for your children’s expenses now, and once they turn 18.
While no one plans for a family breakdown in their future, you can definitely plan for a financially fruitful future for your shared children.
Want to know more about financial planning for families? Contact Crest Accountants today for all your family accounting needs, and more about setting up a trust fund for your children.
