Family trusts are used for several reasons and assist in family financial affairs, specifically tax and estate planning strategies.
Family trusts typically involve family members who contribute to decision making over trust assets.
Author: Emily Grundy-Hyam
30 August 2022
Family trusts are used for several reasons and assist in family financial affairs, specifically tax and estate planning strategies. Family trusts typically involve family members who contribute to decision making over trust assets.
Can I keep my Family Trust out of my Property Settlement?
There is a common belief that by securing assets in a family trust, the assets are unable to be used to initiate family law property proceedings. This is untrue. Family trusts are considered as either an asset or a financial resource of the relationship.
Under Section 4 of the Family Law Act 1975, trust assets can be considered within the property pool if either party has influence or control over the trust as an appointor or a trustee.
If a party of the marriage or de facto relationship is a beneficiary of a family trust and they are to receive distribution payments of the trust as income or capital, either now or in the future, it is considered a financial resource. This will be considered by the Court when making property orders under Section 75(2) of the Family Law Act 1975.
When do I have to disclose an interest in a Trust?
When the relationship ends and a property settlement begins, both parties have a duty to disclose any assets, liabilities, and financial resources available to them. This includes any cash, investments, property, loans, or superannuation that they hold in their sole name, or receive some benefit from. As part of this disclosure, if you are a beneficiary of a trust, you are required to provide copies of the trust deed and any financial or tax statements in relation to that trust.
If my trust is considered an asset, how can I keep it?
This depends on the nature of your asset pool and what other assets are available to support the needs of each party. In property settlements, both parties have entitlements which are considered based on financial and non-financial contributions and the future needs of the parties. If when looking at the asset pool for a couple where a family trust is involved, there are insufficient assets to meet one party’s entitlement, a transfer of trust assets or a payment distribution may be required.
If you have any questions about family trusts in property settlement matters, or to seek some general advice about your family law matter, please contact our experienced team of family lawyers at Access Law Group at alg.com.au or call (02) 4220 7100 to book your initial consultation.