What happens to family trusts on divorce? When a family trust earns income or capital gains , they are divided between the beneficiaries , on the advice of the accountant , to minimise tax. It is the beneficiaries who pay tax, not the trust. Will a family trust protect your assets against divorce?
A recent article featured in the Sydney Morning Herald and the Canberra Times refers to the use of Family Trusts both for tax savings and for asset protection , saying some people are ‘using’ trusts for ‘depriving a divorced partner of their fair share of joint property. The High Court’s decision in Spry exemplifies the Court’s wide power in the Family Law jurisdiction to dismantle Trust structures for family law purposes. As was done in the later cases in this article, consider separating the trust from a “controlling” person. A common question for anyone generating a degree of wealth is how can I protect my assets from divorce and can trusts protect assets from divorce.
The short answer is the assets of a standard form of trust are almost alwaysavailable on divorce (the reasons are set out below). However, with special advice and the use of particular forms of trust , assets can be protected from divorce. See full list on stepslaw.
Step – consider what is just and equitable. (more…)