Relationship property the Clayton case | Simpson Western - We're on your side
But a year on, has the legal landscape for trusts and relationship property really changed? We take a look at the latest case law and see how the courts are. The Property (Relationships) Act and the way that the courts have interpreted the law expressly allows for the trust owned house to be included in some. This Blog shall tell you some more about the difficult intersection between relationship property and Trusts.
Relationship Property and Trusts: A Messy Marriage
Mr and Mrs Clayton were married for many years, had two daughters together, and later divorced. The assets were primarily held in a number of Trusts.
In the end, the Court continued to give support to ensure that assets accumulated during long relationships are shared more evenly, whether they were held in trust or not.
This Blog shall tell you some more about the difficult intersection between relationship property and Trusts. Relationship Property If your relationship comes to an end, either by separation or because of death, the Property Relationships Act applies.
Relationship property generally includes the family home and chattels furniture, vehicles, etceteraand any other property that was acquired by the couple during the relationship. There is also a need to take into account the interests of any children of the relationship; in particular it provides greater powers for the Court when deciding on how and when relationship property should be divided. Separate Property Separate property generally includes property acquired prior to the relationship and is kept separate during the relationship for example a rental property and its income ; property acquired by succession, inheritance, or gift via a third party or as a beneficiary under a Trust usually a Family Trust settled by a third party; property purchased with the proceeds of a separate property; and heirlooms, taonga and chattels used principally or solely for business purposes.
Can you trust your trust? What you need to know to protect your home.
What you need to know to protect your home. The following hypothetical scenario is very common: Jess has decided to purchase a residential property. Jess is currently single, but is aware of the reality that at some point in the future she may enter into a relationship, and that her new partner may wish to move into her property with her.
She wants to make sure that the property is safe and will not be subject to any relationship property claims in the future. Having talked to her friends and family, Jess transferred the house into a trust.
Jess now believes her property is safe. Jess may very well be correct; holding assets in a trust is generally an effective asset protection structure.
However, that is not always the case. This case involved a trust that was set up by a mother for the benefit of her daughter and grandchildren, during the daughter's marriage.
- Relationship Property and Trusts: the "Bundle of Rights" Theory?
- Relationship property: the Clayton case
The trustees were the daughter and two trustee companies. The daughter and her husband separated after more than 25 years of marriage; the husband sought orders against the trust, citing Clayton and he argued that his wife's interest in the trust was relationship property.
Relationship Property and Trusts: the "Bundle of Rights" Theory?
The High Court found that the interest was not relationship property as there were two other trustees and they all owed fiduciary duties to the beneficiaries.
Buxtone v Buxton Once again the High Court engaged in a detailed analysis of the relevant trust deed to determine whether or not powers given to a spouse under the trust deed were relationship property. The court found that the powers were not having regard to the differences between the trust deed in question and the trust deed in a Clayton.
Crucially, Mrs B could not appoint trust property to herself as Mr Clayton could because there was a clause in the deed preventing a trustee from exercising powers for their own benefit. Again, the claim based on Clayton failed. Roberts v Henderson In this case an applicant wife claimed that separate property a debt owed to her husband by a family trust had become relationship property.
Her application failed in the Family Court and her appeal was dismissed by the High Court. The decision shows that arguments based solely on general fairness or the desire for a 'just outcome' relaying on Clayton are likely to fail.