How to deal with trust property in property settlement
A spouse’s interest under a Trust, depending on the nature of that interest and the degree of control can be treated as property by the Family Court. A recent case has considered whether the assets held in a Trust were assets of the parties’ marriage for family law purposes.
- The husband and his sister were “appointors” of an Investment Trust. The husband was the sole director of the trustee company.
- The Investment Trust had an interest in (3) rental properties and had a net value of approximately $800,000. The properties were built by the husband through the marriage within the Investment Trust structure.
- During the parties marriage the husband operated a business cheque account on behalf of the Investment Trust. Over a number of years, the husband borrowed funds for the Trust by way of mortgage against matrimonial property. The husband and wife repaid these and then a subsequent repayment was received by the Investment Trust (some years later in some instances) and on each occasion without an interest component.
- The husband sought in the proceedings to establish that the Investment Trust assets were for the beneficiaries of the Investment Trust which included himself, his sister and their children to the exclusion of the wife.
- It was implausible that the wife would allow the parties to add to their mortgage to build up the assets in the Investment Trust if the Trust was only to benefit the parties’ children and the husband and his sister. This was particularly so when the wife worked full-time to meet the mortgage repayments of their home, which repayments were often higher due to amounts advanced to the Investment Trust.
- That the Investment Trust assets were property of the parties to the marriage for property settlement purposes