Lessons from decisions since Spry

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Lessons from decisions since Spry’ at the following link - https://youtu.be/IWsmKqpgwbs

As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –

Immediately following Spry, the feeling of many observers was that there would never be any outcome in a family law matter other than to say that the assets of trusts were entirely exposed. 

What actually happened, however, is that despite the decision in Spry and a number of subsequent decisions have reinforced this, that trusts potentially remain a very robust asset protection vehicle.

Having said that, it is also clearly the case that the court will not be in any way restricted in terms of what they can and cannot do with the assets of a trust, if they have a legitimate reason to believe that there are grounds for doing so. 

Some examples might be if:

• the trust is actually the ‘alter ego’ of one of the parties to the relationship;
• it can be seen that the assets of the trust have really been created because of the joint effort of the relationship; and
• the assets of the trust have traditionally always been used for the benefit of not just the two spouses, but also wider family members.

In each of those types of scenarios, the court will rely on, if not Spry itself, certainly principles adjacent to Spry, to look beyond the trust structure and deal with the underlying assets of the structure.

Impact of the Spry decision on trusts

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Impact of the Spry decision on trusts’ at the following link - https://youtu.be/mFkCvyZaqZs

As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –

There is no doubt that immediately following Spry, basically everyone was assuming that the position moving forward would be that no matter how you set up a trust, and no matter if it was a family trust or a testamentary trust, it would never provide any level of asset protection at all. 

However, the reality in relation to Spry is that a lot of the reasons for it having such a radical impact in that particular scenario were really driven by the factual circumstances of the case.

For example, there were allegations, though not proven, neither were they disproven, regarding mismanagement of trust assets, deliberate threats to actually destroy trust property, and deliberate attempts to mislead the judges through the various stages of the court process. 

If you look at Spry in the context of these allegations, in terms of the wider factual scenario, and some of the subsequent cases, it's probably fair to say that you can distinguish a lot of the general trust structuring planning is in this area, away from the decision of Spry itself.

Until next week.

Using discretionary trusts to protect inheritances

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Using discretionary trusts to protect inheritances’ at the following link - https://youtu.be/lkkevmdo4MU

As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –

Historically, the reality has been that no matter if it’s a normal family trust or some form of testamentary trust, there's been a general acceptance that the Family Court could attack the assets of that trust in particular circumstances.

However, if it was structured appropriately, and care was taken in terms of how the trust structure was setup, then the assets of a trust would generally be quarantined.  The concern in recent times has been the decision of Spry, which received a lot of media attention. 

That decision seemed to create the impression, on the face of it, that no matter what form of structure was setup - family trust or testamentary trust - and no matter how that was crafted in terms of the control structure of the arrangement, the assets of the trust would always be completely exposed. So, obviously a decision that created a radical change in terms of the way people approach setting up trust structures.

Until next week.

Division 152 and the turnover test

Following on from a recent post, one adviser made contact with me in relation to an additional planning opportunity that is often overlooked.

In particular, where the business satisfies the $2 million turnover test, it can be possible that the $6 million net asset test is ignored.  Particularly in relation to agribusiness clients, the turnover test can provide a significant benefit that would otherwise be unavailable if the net asset test needed to also be satisfied.

Until next week

Image credit: Michael Scott cc