You may be wondering what claim a partner has in a property division against property that has been disposed of to a Trust. It is a common misconception that Trust property cannot be claimed during relationship property proceedings.

While it is true that, generally speaking, property in a Trust will not be considered relationship property, this is not always the case. The law allows for Trust property in some cases to be claimed as relationship property.

The law allows the Court to make an order in relation to Trust property if two main requirements are satisfied:

a.    The property was transferred to the ownership of a Trust since the marriage, civil union, or de facto                              relationship began; and

b.    The transfer has the effect of defeating the claim or rights of one of the partners.

The Supreme Court recently discussed the circumstances in which each of these requirements may be satisfied.

The Court decided that the reading of the law does not only apply to property that has been transferred after the de facto relationship officially began. Instead, a broad interpretation should be given to the meaning of this requirement. This means that any property disposed of when there is contemplation that a de facto relationship will arise in the future may be affected.

The Court noted that not all property transferred to a Trust in the “early stages of a relationship” should be subject to the law. It said this would be unfair and limit the parties’ freedom to control their property.

However, if the party has an intention to enter into a de facto relationship with their partner, any transfer of property will be subject to this law.

Whether a de facto relationship is in contemplation is based on the facts provided that indicate a de facto relationship exists. These factors include:

·         age,

·         the parties’ living situation,

·         duration of the relationship, and more.

The Court confirmed that an intention to defeat the other partner’s relationship claim or rights over the property is ­not required for this element to be met. It is enough that the person knows that transferring property to the Trust will defeat the claim or rights of the other partner, and the person transfers the property anyway.

If these two elements are met the Court may make an Order under the law dealing with the affected Trust property. These orders include:

·         requiring one partner to pay a sum to the other partner suitable to remedy the loss,

·         requiring one partner to transfer property to the other partner,

·         requiring the Trustees of the Trust to pay one partner the whole or part of the income of the Trust.

It is important to be aware of your rights and obligations in relation to relationship property proceedings. If you are confused about these rights and obligations, it pays to seek advice from a professional with experience in the area.


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Shaun Cousins and Hunter Flanagan-Connors