Trusts can be included in property settlements20-March-2014 Family Law By admin
Are you going through a property settlement with your former partner? If you or your partner has a Testamentary Trust, you may be keen to know how the Family Court will treat your interests in this kind of trust. (A Testamentary Trust is one that is created under a will, which gives trustees greater control over the distribution of assets to beneficiaries).
While the tendency of the Court is to view a Testamentary Trust as a financial resource, the Court can consider a Testamentary Trust to be part of the couple’s combined assets, as decided in the case of Lovine v Connor  FAMCA 432.
Trust assets considered as part of the matrimonial asset pool
In this case, the court found that the inheritance the husband had received from his father in a Testamentary Trust a year after he was married should be considered a capital asset. This contribution to the asset pool (of $1.4 million) was easily identifiable as coming directly from the husband. For this reason, the judge awarded the husband a greater pool of the marriage assets to reflect his clearly identified contributions. But the husband had argued early on (without success) that the trust’s assets should not be included in the matrimonial asset pool at all since they were a financial resource that only affected the future needs of the parties. The judge found that since the husband controlled the assets in the trust, it should be included in the matrimonial pool.