The Basics: Division of trust property

In some families property is held in a Trust. When a relationship breaks up the issue is then how the entitlements of the partners should be resolved in the changed circumstances.

It is increasingly common for the family home to be trust property, and sometimes business interests are ultimately owned by the trustees of a family Trust.

While property is held in the name of trustees, the trustees do not have ownership rights. They hold the property in trust for the beneficiaries of the Trust.

Discretionary beneficiaries of a Trust do not have any right to trust property, but the trustees must consider their circumstances and have a discretion to give them trust property. Final beneficiaries of a Trust are the persons who end up with the trust fund at the end of the Trust’s life if there is then any left.

The person who can hire and fire the trustees, often called the Appointor, is the person who controls the Trust. If that person does not have your interests at heart you are unlikely to continue to receive benefits from the Trust.

If there is a nuptial flavour to the accumulation of property into the Trust the Family Court has jurisdiction to restructure it so as to benefit both spouses and any children beneficiaries. This is on the basis that with the changed circumstances on a dissolution of marriage, the previous benefits a husband and wife may have had from the Trust may have ceased for one of them. This remedy is only available when there is a marriage. It does not apply to de facto relationships.

Despite this possible Court intervention, a division of trust property can always be agreed.