By Andrew Steele - 1 Mar 2019
In Clayton v Clayton, the Supreme
Court quashed any residual belief that a discretionary family trust
set up by one spouse during a marriage will, in the event of the
marriage dissolving, protect 'their' property from a claim by the
other spouse.
The Court effectively held that whatever the spouses' stated
intentions may be regarding a trust's purpose, if the trust's
function was to provide for the family - either of the spouses
and/or their children - then section 182 of the Family Proceedings
Act 1980 (the Act) provides an avenue to seek the
Court's relief should the marriage dissolve. That relief may well
mean an equal sharing of the trust's property between the spouses
consistent with their expectations of the trust's purpose had the
marriage continued.
Some believe that the relief available under section 182 of the
Act is limited to circumstances where there is a dissolved marriage
or civil union. In fact, the section casts its net wider than
this. The Court may also act under section 182 following any order
under Part 4 of the Act including, for example, following a
declaration validating a marriage or civil union.
The team at Martelli McKegg recently obtained an order from the
Family Court in Singh v Bourchier declaring a marriage
valid under Part 4 of the Act, notwithstanding that the marriage
was a duly registered marriage under New Zealand law. The result
now entitles the widow, whose husband died in an unexpected
accident, to apply to the Court under section 182 for an inquiry
into and relief from the family's trust despite the fact that the
marriage was not and never will be dissolved.
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Trust and estate litigation
team