Court finds property transferred into family trust prior to relationship can be divided in relationship property proceedings…

The Family Court has upheld a woman’s claim that property that had been transferred to a family trust prior to the start of the relationship should be included in the division of relationship property.

The woman claimed that her ex-partner had transferred the property to defeat a claim she might have under relationship property law. 

The woman and her ex-partner separated in June 2020. They had been living in a de facto relationship since December 2010, or January 2011 at the latest. The ex-partner had previously been married, his marriage having ended in January 2010. 

Before entering the new relationship, the ex-partner went through relationship property proceedings with his ex-wife. He was advised to transfer his residential property into a family trust in order to protect it from any future relationships. 

The property was officially transferred to the family trust in August 2010. 

The Court had to determine whether the ex-partner’s transfer of the property to the trust was a transfer of property intended to defeat his later partner’s claim against it. If that was the case, the woman could make a claim against the property. 

This issue first required determining whether the couple had a “clear and present intention to become parties to a de facto relationship” when the property was transferred to the family trust.

The ex-partner argued that he and the woman were not in a long-term relationship when he transferred the property to the trust. The couple met in 2009 and became friends towards the end of the ex-partner’s marriage. Their romantic relationship did not commence until early 2010. 

The ex-partner also argued that the conversations he had with his advisors about transferring the property occurred before his relationship with her began. However, the Court found that these conversations occurred after the romantic relationship commenced. 

The Court considered that around the time the property was transferred the couple were spending regular time together. The ex-partner met the woman’s children and spent time with them, and they often spent time with another couple. 

The couple started living together in the property around the end of 2010. 

The Court accepted that the couple were not in a serious relationship when the ex-partner first considered transferring the property into a trust. However, when further discussions took place and the actual transfer of the property to the trust occurred, “…there were signs of permanence in their relationship”. 

The Court considered that the couple had been in an exclusive relationship for eight months when the property was transferred, the ex-partner had been introduced to the woman’s family and friends, and the couple were involved in each other’s lives for ordinary and special occasions. 

The Court concluded that there was a “clear and present intention to become parties to a de facto relationship” when the transfer of property occurred. The ex-partner therefore transferred the property to the trust with the knowledge it would defeat any future claim the woman may have in it, and therefore acted to defeat that claim.

The property could therefore be subject to relationship property proceedings. 

This case acts as an important reminder of what may be considered relationship property by the courts, and how important it is to protect your property fully. 

If you are confused about relationship property and would like clarification on 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.

Please note that Rainey Collins is not contracted to provide Legal Aid, other than in the Treaty of Waitangi area.  We therefore are unable to take on any Civil or Family Legal Aid work. If you require Legal Aid in those areas, you can search the list of Legal Aid lawyers on the Ministry of Justice website.