Earlier posts have looked at various aspects of the leading family law and trust case of Harris – see -
A Practical Analysis of Harris
Read the deed - another reminder re invalid distributions
As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers some related practical issues in relation to this case in a ‘vidcast’ at the following link - https://youtu.be/xO0rrLqGSkU
As usual, an edited transcript of the presentation for those that cannot (or choose not) to view it is below –
A further very interesting aspect in the case of Harris, is that over many years, there'd been distributions made to a bucket company by the relevant family trust.
The 100% shareholder in that bucket company was the husband. So the wife had a legitimate expectation in relation to that company that she would be absolutely entitled to at least 50% of that under the property settlement.
There was over $1 million worth of distributions that had been made to that bucket company over time out of the family trust that owned the business.
What the court did was that they actually read the trust instrument.
The trust instrument was quite particular on who the beneficiaries were, including saying that any bucket company must be expressly listed as a beneficiary. Here the relevant company wasn’t listed as a beneficiary.
This meant there had about eight or nine years’ worth of distributions that had been purportedly made to the bucket company which were in fact all void.
The family court said we don’t need to get our hands dirty on what the Tax Office might think about that, but we suspect they will be interested. For the purposes of the family law case, the husband was ‘fine’ because the bucket company was in fact valued at nothing.