Whether a spouse can access assets from your related testamentary trust in the event of a marriage or defacto relationship issues is a complicated one. The answer depends on several factors, including the terms of the trust, the trustee and appointor roles (the appointor of at trust has the power the change the trustee) and the circumstances of your matrimonial or defacto relationship breakdown.

  1. Trust Terms: The will or trust deed outlining the terms of your testamentary trust is crucial. If it explicitly excludes your ex-spouse as a beneficiary, they typically wouldn’t have any claim to the trust assets. Trusts can be structured with specific provisions to prevent former spouses from benefiting both during and after the marriage or relationship ends.
  2. Property Settlement: The terms of any property settlement between parties will be relevant. If the settlement agreement addresses the division of assets, including financial resources such as trusts, it could impact whether your ex-spouse or partner has rights to assets in the trust.
  3. Legal Framework: In Australia property settlements between separated spouse are regulated by the Family Law Act 1975 (Cth). In some cases Court orders made pursuant to the Family Law Act may override the trust’s provisions or be influenced by them. In some cases the assets of a trust can be regarded by the Courts as being property of a marriage or relationship. In such a case the Courts could make orders as to the trust “property” including orders paying it to a former spouse. In other cases the  Courts may not regard the trust assets as property of the marriage or relationship but may, particularly where one party effectively controls the trust, may take it into account when adjusting ownership rights to other property of the marriage or relationship. If you are yet to conclude a property settlement and have a trust including a testamentary trust then you should ensure that control of the trust and entitlements to share in its assets are properly determined and reflect in the terms of settlement or Court orders.
  4. Trustee Discretion: If you’re the trustee of the testamentary trust during your lifetime, you have discretion over asset distribution. You can structure the trust to benefit your chosen beneficiaries while excluding your ex-spouse. However, if someone else is the trustee, they must adhere to the terms of the trust deed.
  5. Legal Advice: Consulting with a family lawyer or trust lawyer is prudent. They can review the trust documents, the terms of any property settlement, and relevant laws to advise you on whether your ex-spouse may have a claim to trust assets. Professional guidance ensures a clear understanding of your rights and obligations.

In summary, the accessibility of trust assets to your ex-spouse hinges on various legal and factual elements. Careful examination of trust documents, matrimonial settlement terms, and seeking legal advice will provide clarity as to potential entitlements to assets from your testamentary trust. To discuss contact one of our lawyers on 08 8344 6422.