These days many couples operate assets under a trust. Often a
couple's major asset, their house, will not be owned by them
but owned by a family trust. Sometimes the majority of assets are
owned by a trust or trusts rather than owned by the couple.
When a couple separate and come to divide their property the
court has some ability to deal with trusts under the Property
(Relationships) Act but it is often a very limited ability to
interfere with trusts which in many cases continue to operate under
trust law regardless of the couple's separation.
Sometimes trusts are under the control of one party rather than
both and the other party may have a limited ability to realise
assets from that trust.
Where a couple were married (it does not apply to de facto
relationships) there is a provision under section 182 of the Family
Proceedings Act which gives the court significantly greater power
to deal with property owned by a trust. Its powers include the
ability to divide the property owned by the trust and settle it on
individual trusts, one under the control of one party and one under
the control of another. Although it won't usually be the case,
section 182 has even been held to apply to a trust that was set up
by one of the parties parents rather than the couple
Section 182 is an important consideration to take into account
where a married couple separate and a trust exists over which one
party has no control. But it is also important to consider when
entering into a contracting out agreement to make sure that
agreement prevents S182 applying to any trusts and trust property.
Overall it is important that any contracting out agreement deals
not only with assets owned individually or jointly by the couple
but also owned by other entities such as a trust or company.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
To ensure that all possible problems are considered and addressed, the transactions must be appropriately documented.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).