Dealing with a Trust in your Property Settlement
If assets are held in a Trust, an important issue arises as to how that Trust is dealt with in a Property Settlement.
A Trust is an arrangement where assets are held in the name of a Trustee on behalf of the Beneficiaries named in the Trust Deed.
When deciding an Application for Property Settlement, the Court has a broad discretion as to what it may find to be the property of the parties.
Family Trusts & Property Settlement
The Court has frequently decided that assets held in a Family Trust are to be treated as property to be divided between the parties.
A Family Trust, often a Discretionary Family Trust, is sometimes used as:
- a way of distributing income from a business;
- a means of asset protection.
A beneficiary of a Trust is not the legal owner of assets of a Trust until they are distributed by the Trustee.
What Courts want to know about Trusts in Property Settlement Applications
When deciding whether the assets of a Family Trust should be considered property and divided as part of the property settlement, the Court will consider the:
- terms of the trust;
- identity of the trustees and beneficiaries;
- if the trustee is a company, who has control of the trustee company;
- identity of the appointment or principal of the trust;
- the class of beneficiaries within the trust;
- assets held within the trust;
- how the trust assets were acquired and financed;
- history of the trust and distributions from the trust;
- relationship between the parties to the trust, for example the trustee and beneficiary;
- income created from trust assets, and how this is distributed;
- income distributed since separation.
Court Orders about Trusts in Property Settlement
The Court has a wide discretion to make orders in relation to a trust.
The Court can order that a beneficiary relinquish their interest in a trust, and that the trust deed be amended reflect this.
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Other Pages in the Property Settlement Section
- What will our Property Settlement & Division involve
- How do I work out how much I will get or pay – How is Property Division Calculated: The 4 Steps
- Example of a percentage Property Division
- Do I have to document your Property Settlement Agreement
- Risks of not documenting your Property Settlement
- How do you document your Property Settlement
- Consent Orders or BFA to document Property Settlement
- Property which must be divided
- Your Company & Property Settlement
- Your Business & Property Settlement
- Trusts in a Property Settlement
- Repaying Loans or Gifts from relatives made during Relationship
- Property Settlement & Superannuation Splits
- Stamp Duty, Capitals Gains Tax & Property Settlement
- Bankrupt Spouse in Property Settlement
- Third Parties (Banks, Creditors, Family) in Property Settlement
- Property Settlement Time Limits
- View some actual Property Settlement Cases