Following recent family law related posts, this week, an adviser reminded me of the case of Beeson v Spence [2007] FamCA 200 which highlighted the importance of the factual matrix on how exposed the assets of a trust are. The decision is still regarded as one of the most important in relation to trusts and family law.
Briefly the case involved a wife and husband who met in 1996 and married in 1997. They had two children and subsequently divorced in 2004. In 2001 the wife had established a trust known as the S Trust.
On establishment of the trust, the wife’s father and her solicitor were appointed as trustees and the wife was the appointor. The specified beneficiaries were the two children of the marriage and the wife and husband were within the class of potential beneficiaries.
In 2003, at a time when the husband was going through financial difficulties, and when the wife and husband had separated, the deed was varied to exclude the wife and the husband as potential beneficiaries of the trust, as well as to resign the wife as appointor. A new appointor, being the wife’s sister, was nominated in her place.
After the variation, the deed practically still entitled the wife and husband to receive distributions, not as potential beneficiaries, but as ‘parents’ of the children who remained specified beneficiaries.
In the property settlement proceedings, the husband argued that the trust was established for the benefit of the family as a whole and not just the children.
In contrast, the wife suggested that the trust was ultimately established for the purpose of benefitting the children of the relationship and therefore the assets should not be treated as property of the marriage.
Having reviewed all of the available facts, the Court ignored the release of direct control by the wife (through her resignation as the appointor and the removal of beneficiaries) and held that the wife still retained sufficient control of the trust to support a conclusion that the assets should be treated as property of the marriage.
Posts over the next two weeks will look at the key questions the court took into account in reaching this conclusion.
These posts will show that the factual matrix is decisive in determining whether the property is matrimonial property. This is because the assets of the trust are more likely to be matrimonial property where, among other things, the trust is essentially the alter ego of one of the parties to the marriage.
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** for the trainspotters, ‘Sometimes’ is a song by Ash. View hear (sic):