Is an asset of the marriage out of reach of the Family Court?
When separation occurs spouses must turn their minds to, what makes up their property pool for division? It may be a surprise to some people to learn that almost all assets, whether held jointly, solely or in company or even trust names may be considered to part of the matrimonial property pool.
If a spouse seeks to change how an asset is held, after separation, then in certain circumstances the Family Court can stop them. In a recent case, an estimated $5-7M was held in a family trust, with a trustee company as legal owner. The spouses had been together in a de-facto relationship for 17 years and the family trust had existed for almost 20 years. The couple had no children, but the de-facto husband had adult children from a prior relationship. He had been the sole director of the trustee company for all of the 17 year relationship and an unrelated party (who was the husband’s business partner) was the appointor of the trust.
After separation the husband changed the appointor to his brother and added two more directors to the trustee company, who were his adult children. There were several months delay in his advising the de-facto wife of the changes made to the trustee company.
The lawyers for the husband suggested that due to the changes made by their client the assets of the family trust should not be valued because they now fell outside the matrimonial property pool.
In opposing this, the wife was successful in obtaining a court order preventing any distribution of the capital of the family trust, due to the risk that if it occurred it may defeat her family law property settlement entitlement. The trustee company was however allowed to distribute income derived from the capital as this was not likely to be an amount which could not otherwise be dealt with or allowed for in the context of the pool as it was unlikely to be a significant amount, the same could not be said for a capital distribution.