When Is Trust Property Considered 'Property' In Family Law Settlements?

Posted by Hannah Palos on 12 September 2018

The issue of whether trust property is ‘property’ belonging to an individual and able to be divided for the purposes of a Family Law property settlement is often complex and has been the subject of many cases before the Family Court.

One of those cases includes the recent matter of Harris & Dewell and Anor [2018] FamCAFC 94.

That case concerned a Unit Trust which had a value of approximately $6 million and which was solely owned by the Husband’s 99 year old father. However, the Husband in that matter also exercised control over the units of that Unit Trust.

The Wife argued that due to the fact that the Husband had control over the Unit Trust property, the Court should treat that property as belonging to the Husband and therefore include it in the property pool to be divided between the parties.

After considering all of the relevant evidence, the Court decided that although the Husband did exercise some control over the Unit Trust property, he did not have ultimate control over it. This was because under the Unit Trust deed, the Husband’s father was solely responsible for distribution of that property and was also the only person entitled to benefit from any such distribution. As a result, it was the Husband’s father who exercised ultimate control over the Unit Trust property.

The Court decided that in the circumstances, the Unit Trust property was not ‘property’ belonging to the Husband. Accordingly, that property did not form part of the parties’ property pool and was taken into account as a ‘financial resource’ available to the Husband.

The facts of that case are in contrast to situations in which one of the parties to a relationship has such a degree of control over trust property that they treat that property as their own. In such cases, the Family Court has determined that the Trust is an “alter ego” of that party and has included the trust property in the parties’ property pool.

The matter of Harris & Dewell and Anor makes it clear that for a party’s interest under a trust to be considered ‘property’ in a property settlement, mere control over trust property is not sufficient and the Court must consider all relevant factors, including the nature of that party’s interest.

If you would like assistance with your property settlement, please contact the Family Law Team at Selvaggio Lawyers on (02) 9899 9677.

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