Understanding your rights and options regarding claims against a Family Trust under the Family Proceedings Act is essential, especially if you were in a marriage or civil union and believe that you may have been disadvantaged by the formation of the Trust. In this article, we will explore the criteria and steps involved in making such claims and provide insights into who can make these claims under New Zealand law.
Eligibility for Claims
If you were part of a marriage or civil union, you may be eligible to make a claim against a Family Trust, particularly if the Trust qualifies as a “post-nuptial settlement.” The Family Proceedings Act grants the Court the authority to vary the terms of a Trust’s settlement to benefit one of the parties who has been disadvantaged by the Trust’s establishment.
Three Essential Elements
To pursue a claim under the Family Proceedings Act, three critical elements must be satisfied:
- Post-Nuptial Settlement: The Trust in question must be classified as a post-nuptial settlement.
- Disparity: The Court must determine that there is a disparity between the partners, meaning that one party is in a worse position after the relationship’s breakdown than they would have been had the relationship continued.
- Discretion: The Court has the discretion to decide whether to exercise its power to vary the Trust to benefit the disadvantaged party.
Understanding Post-Nuptial Settlements
A post-nuptial settlement is any arrangement that provides ongoing provisions for spouses in a marriage or civil union, or for the children of such a union. This category includes Family Trusts that are established after the commencement of a marriage or civil union. To be classified as a post-nuptial settlement, the Trust must primarily benefit the spouses or children of the relationship. If one or both partners are beneficiaries of the Trust, it is likely to meet this criteria.
Evaluating Disparity
Once a Trust is identified as a post-nuptial settlement, the Court will assess whether a disparity exists between the partners. This means determining whether one party is in a worse position after the relationship’s end than they would have been if the relationship had continued.
Exercising Discretion
If a disparity is established, the Court has the authority to modify the Trust’s terms to benefit the disadvantaged party. When making this decision, the Court will consider various factors, including:
- The Trust’s terms
- The source of the Trust assets
- Contributions made by each partner to the Trust assets
- The presence of children from the relationship
- The duration of the relationship
Current Limitations and Future Possibilities
It’s crucial to note that the law currently applies only to marriages and civil unions. Many have argued for its extension to include “de facto relationships” as defined under relationship property law. If such an expansion were to occur, partners in relationships lasting more than three years might be eligible to make claims under this law. However, as it stands, only married or civil union partners have this option.
Understanding your rights and the potential for claims against a Family Trust is vital, especially in complex scenarios involving Trusts. If you’re uncertain about your rights and options, seeking advice from a professional with expertise in this area can be highly beneficial. Don’t hesitate to explore your legal avenues and protect your interests, particularly if you believe you’ve been disadvantaged by a Family Trust in a marriage or civil union.
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