A married couple Jack and Jill have been together for 20 years. For 15 years they have lived on the family farm which the husband has run (with assistance from his family). They have two children and the farm has been in their family for 4 generations, on paper it is worth millions.

Jill ran the household, raised the children and assisted with farm administration in any way she could.

Jack’s parents transferred the farm into a family trust 35 years ago in order to asset plan for future generations including their 5 children. There are now 7 grandchildren all of whom are beneficiaries of the trust. It is normal practice that the child running the farm (Jack) is likely to inherit the farm subject to Jack paying his 4 siblings a portion of the asset in cash so that they’re not overlooked. Due to the high value of farmland it is unlikely Jack will only inherit 1/5th of the farm due to most farms not being able to sustain an 80% debt level. Jill is aware of this and knows Jack was expecting to inherit 50% of the farm as this had been talked about over family dinners.

Because Jack and Jill have lived on the farm for so long and never anticipated separating, they have not invested in any personal assets themselves.

Jack and Jill have decided to separate, and Jack has made it clear that Jill is only entitled to 50% of their assets being the household furniture, vehicle and what little savings they held in their bank accounts.

Where to from here?
Answer:
When a home is owned in a family trust it complicates matters in situations like this especially when Jill has contributed to the family in so many ways allowing Jack to work in the way that he did.

The first step is to find out who the trustees are, who the beneficiaries are and what provisions have been made for them. It is unlikely that Jill will be a beneficiary.

If you’re not a beneficiary, it may still be possible to bring a claim against the trust assets. If however, you were compensated for the work you did on the farm such as a salary/wages then it is less likely that you’ll be able to successfully bring a claim.

This is a very complicated area of law which means bringing a claim against the trust is costly. Because of the time-consuming nature of bringing a claim such as this and the stress that goes with it your best bet once you’ve received advice regarding your position is to reach an agreement between yourselves.

If you’re looking at this from Jack’s perspective or Jack’s parents’ perspective and you want to protect the family farm from a potential claim, then do not rely on the family trust structure to protect you and your family. The Courts have been lenient in recent years electing to divide family trust assets. The best form of protection for the farm is for the couple to enter into a Prenup (Contracting Out Agreement).

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