As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Sham trusts’ at the following link - https://youtu.be/ERpGAlIf_ro
As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –
Sham Trusts are probably the most interesting aspect of what is otherwise a very interesting topic in terms of structuring of trusts from an asset protection perspective under the family law provisions.
Ultimately, a sham trust will be held to exist where there has been a deliberate and focused attempt by the people behind the trust to actually completely mislead and deceive anyone else that might have come into contact with it, whether it be other beneficiaries, former spouses or indeed the court.
Where a sham trust is held to exist, what the court is empowered to do is just completely ignore it as if the trust is a complete nullity. Obviously this is a very radical power given to courts, in that despite the legal documentation, the court can just completely ignore it.
What the cases have shown is that while the Family Court certainly has the power to deem a trust to be a sham, they are very reticent to do so, unless there is very clear evidence to support such a finding.