How long is it going to take to resolve my dispute?

Settling out of court will take on average 3-6 months. However if the matter goes to court it will take 6 to 12 months. We can advise you on your options.

What are the risks of creating a trust?

There is the risk that your trust may be attacked as a sham. A sham trust occurs when a trust is created and intended to appear as a legitimate trust but does not affect the rights and obligations of those named as the beneficiaries. For a sham to be established common intention is required between the trustees and the settlor. There is no legislation on sham trusts at the moment but case law suggests that the Courts will recognise an intention to mislead the Courts by creating a sham trust.

What are the ongoing obligations of trustees?

Duty of obedience: A trustee must be obedient to his/her trust instrument and what has been written in the trust instrument. This includes duties such as adhering to the terms of the trust and administering the trust personally.

Duty of prudence: The trustees must exercise Prudence. For example, the trustees must invest prudently and keep proper accounts. They must be diligent and prudent with the financial matters in the trust that they have been made responsible for.

Duties of loyalty: Trustees must remain loyal to the trust. This means avoiding conflicts of interest and upholding a duty not to profit. They must not purchase the trust property.

Is setting up a trust for everyone?

It is completely up to you as to whether you wish to put property in a trust.  The more property that is included in a trust and the more complex your trust instrument is will depend on the legal assistance you will require. Advice and assistance from a lawyer will help to protect your trust against potential claims.

Can a trust be attacked?

Trusts can be attacked in particular ways. Firstly, if the transaction is a sham (see above for explanation) it will lack intention to create a legitimate trust. Secondly, it will be illegitimate if it is ruled to be an illusory trust. Illusory trusts are when the trust does not exist in reality because the settlors have access to control of the trust and it is clear that the settlors never intended to create obligations on the settlors.

Should I be a trustee if asked?

Being a trustee is a big responsibility not to be taken lightly. You should firstly see the obligations (as stated above) and if whether you would be able to discharge these. You should also consider the property in the trust and whether you have the expertise to exercise prudence in investing these and handling the accounts.

Following a break-up, can you regain relationship property that has been put in your ex-partner’s Trust

Under section 44 of the Property (Relationships) Act 1976 a Judge may set aside a disposition when it has been put into trust where the disposition has been made to defeat other person’s claim to the property. The test of intention is whether the person disposing of the property knew or ought to have known that by disposing of the property he or she was exposing his or her spouse or partner to a significantly enhanced risk of not obtaining his or her share in the relationship property. The Courts can order that the person to whom the disposition was made transfer the property or pay the value of the property or pay the interest in the property from the person to whom the disposition was made. However, if the person who received the property received it in good faith and for adequate consideration then the Courts will not make a transfer.

Are there any other remedies if relationship property has been disposed of to an ex-partner’s Trust?

If no order is able to be made under section 44 a spouse or partner can apply to the Courts to make an order for compensation under section 44C. Under section 44C if the Court is satisfied that relationship property has been disposed of since the parties entered a marriage, civil union or a de facto relationship and the disposition has the effect of defeating the claim or rights of one of the spouse or partners then the Court may make an order requiring compensation. Compensation may require one spouse or partner paying the other a sum of money; or an order that one spouse or partner transfer any property; or an order requiring the trustees of the trust to pay one spouse or partner the whole or part of the income of the trust. The Courts will not make an order that would compensate the spouse or partner. They will also not make an order if a third person has in good faith altered their position in either reliance on the ability of the trustees to distribute the income of the trust or in such a way that it would be unjust to make the order.

Can I do anything if the property was put in a Trust when we were together in a marriage or civil union and we have since split up?

Under section 182 of the Family Proceedings Act 1980 when dissolution of a marriage or civil union is occurring the Court may inquire into the nuptial settlement or agreement between parties and how circumstances have changed since the property was settled. The Court will consider the change in circumstances and look at any other relevant matters that the Court considers relevant. Only spouses or civil union partners can make use of this provision as de facto partners are not covered under the Family Proceedings Act 1980. The children of the marriage or the civil union can also be represented if they are affected by the change in circumstances since the property settlement or agreement was made.

“The information posted on this website is prepared for a general audience, without investigation into the facts of any particular case. This information is no substitute for legal advice and does not create a lawyer-client relationship; you are advised to consult with a lawyer on any legal issue.”