Discretionary Trusts and Family Law.

A Discretionary Family Trust is one of the most common small business structures, providing flexibility to distribute to family members and protection of assets.

A trustee holds property on trust for the benefit of a class of beneficiaries, typically including a broad range of family members, including their children and spouses, all of whom have a right to be considered by the trustee for a distribution of trust capital or income.

Couples frequently build up a lot of property in their Family Trust and when they separate they want to know whether that property can be treated as matrimonial property and be divided between them  or whether it must remain on trust for all beneficiaries.

In 2008, the High Court of Australia decided that Family Trust assets of over $4.7 million were "matrimonial property" and available for division between a husband and wife. In 2012, the Full Court decided that $1.5million of Family Trust Assets were not matrimonial property. (You can read about these cases by clicking these links: Kennon v Spry and Harris v Harris).

So why the difference in these 2 cases? And how can one predict the likelihood of a Court ordering that Family Trust assets be divided between the parties?

Your lawyer must have an understanding and working knowledge of Trust Law and carefully assess factors pointing to presence or absence of direct or indirect control by one of the parties over the trust. These might include:
•    Benefits derived from the Trust such as drawings, salaries, use of motor vehicles and payment of expenses,
•    History of distributions from the Trust,
•    Historical exercise of powers of the Trust and involvement in amendments to the Trust Deed,
•    And the degree of affiliation and interests in the trusts such as being a Trustee or director of a corporate trustee, an Appointor or a Trust Guardian.

ReesLaw are experienced Property Lawyers and Family Lawyers providing in depth, reliable advice in Family Law, Trust Law and Business Structures.

For advice and assistance in Family Law and Business Law, call ReesLaw on 07 4632 8484.