Claims against a family Trust under the Family Proceedings Act...

If you are, or were, in a marriage or civil union, you may be eligible make a claim against a Family Trust if it is considered a “post-nuptial settlement”.

The Court in some situations has the power to vary the terms of the settlement of a Trust in order to benefit one of the parties if that party has been disadvantaged by the Trust formation. The Family Proceedings Act allows the Court to vary the terms of a post-nuptial settlement.

There are three elements that must be satisfied for the Court to vary such a settlement:

• First the settlement must be considered a post-nuptial settlement; 
• The Court must then find that there is a disparity between the partners; and finally
• The Court must decide whether to exercise their discretion to make a variation.

Post-nuptial settlement

A post-nuptial settlement is any arrangement that makes a continuing provision for the spouses in a marriage or civil union, or for the children of a marriage or civil union.

Post-nuptial settlements include Family Trusts that are settled after the marriage or civil union began.

The Trust must benefit the spouses or the children of the relationship in order to be considered a post-nuptial settlement. If either, or both, partners are beneficiaries of the Trust, it is likely the Trust will be considered such a settlement.

Disparity

If a Trust is found to be a post-nuptial settlement, the Court will then determine whether there is a “disparity” between the partners. A disparity simply means that one party is in a worse position after the breakdown of the relationship than they would have been had the parties still been together.

Discretion

If a disparity is found, the Court has the power to vary the Trust in order to benefit the party in the worse position.

When determining whether to exercise its power, the Court will likely consider:

• the terms of the Trust,
• the source of the Trust assets,
• contributions made to the Trust assets by each partner,
• the existence of any child or children of the relationship,
• and the duration of the relationship.

The law currently only applies to marriages and civil unions.

It has been argued by many that the law should be extended to include “de facto relationships” as defined under relationship property law.

If that were the case, a partner of any relationship that had a duration of more than three years may be able to make a claim under the law. However, as the law stands, only partners of a marriage or civil union may make a claim in this instance.

It is important to be aware of the claims available to you as an ex-partner or spouse, especially when complicated arrangements such as Trusts are involved. If you are unsure about your rights, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Shaun Cousins and Hunter Flanagan-Connors