Many legal minds making NZ LAW work

We are an association of independent legal practices, proactively sharing ideas and expertise for the benefit of our clients.

Trusts under attack by former spouses and partners

Published: 23rd September 2016

Author: Greg Kelly, Greg Kelly Law Ltd

Published in: Trust e.Speaking | Issue #23

Trustees need to be cautious

Trusts can sometimes be used to protect assets from future claims by a former spouse or de facto partner. However, lawyers and the courts are continuing to find ways around trusts in order to achieve what they see as justice. Recent decisions indicate why trustees need to be cautious.

A trust is sometimes said to be a ‘coward’s pre-nup’. Rather than asking your partner to sign a relationship property agreement, it’s often easier to put your assets into a trust and hope that this will protect them in the event of a relationship breakdown. But trusts remain vulnerable to other forms of claim. There have been a few cases where the court has said a former partner (these have all been women) has a claim to a share in the trust property because she contributed to the property on an understanding that she would benefit.

A couple of years ago in Murrell v Hamilton, the Court of Appeal upheld a High Court decision giving $37,500 to a former de facto partner who had assisted with work on a new house owned by her partner’s trust. She said he had led her to believe they were working together on the property for their mutual benefit. This case has set a precedent.

Two new Court of Appeal decisions

The first new case is Vervoort v Forrest. Again the claimant says she did a great deal of work redecorating and refurbishing a property and establishing a garden. He says that any promise to her would have to have come from both trustees because the law requires trustees to act unanimously. She replies that he had been given authority by his other trustees to speak on behalf of the trust. At times he used his name and the trust’s name as if they were the same thing. He even had an irrevocable power of attorney from his other trustees so he could sign on behalf of the trust whenever he wanted to. However, the woman claimant received nothing in this case because there was not enough detailed evidence of actual contribution to the property.

The second case involved a married couple, both of whom had been married previously. The wife had put money into renovating the trust property using funds from the sale of her previous home. However the husband could point to payments he made to his wife equal to the amount she had contributed. Nevertheless the wife’s payment was treated as a contribution to the property.

The court found that the other trustee had given the husband ‘carte blanche’ to do as he wished with the trust assets. So it was credible that the wife believed the assurances given by her husband. The court also mentioned that the husband could always have asked his wife to sign a relationship property agreement and this could have made it clear she was to have no expectation of an entitlement to the property that was held in the trust. In the absence of such an agreement, the wife had a natural expectation that she would benefit in this way. She was awarded $65,000.

Not sham trusts

In each case the claimant tried to claim the trust as a sham. The court rejected this claim every time. In the past anyone trying to make a claim against a trust has thrown in the word ‘sham’ like some sort of bogey man. It is now quite clear the court will not disregard a trust or call it a sham unless there is real evidence that there was a deliberate intention to deceive from the start.

It is still possible to use a trust in order to ring-fence assets against a future relationship property claim but there is no guarantee that this will work. Assets should be transferred to the trust before the relationship starts. It’s important that one partner is not given sole authority to speak on behalf of all the trustees. It’s also important to manage the expectations of any new spouse or partner by making it clear that what is in the trust stays in the trust, ie: contributions to the trust property will not lead to any entitlement to a share in the property. A written agreement drawn up by your lawyers is a good way to do this.

Murrell v Hamilton [2014] NZCA 377

Vervoort v Forrest [2016] NZCA 375

Related Articles

  • Auckland
  • Bay of Plenty
  • Canterbury
  • Coromandel
  • Gisborne
  • Hawke's Bay
  • Kapiti Coast
  • Manawatu - Wanganui
  • Marlborough
  • Nelson
  • Northland
  • Otago
  • Southland
  • Taranaki
  • Waikato
  • Wairarapa
  • Wellington
  • West Coast

Mike Lucas Law

We are a small law firm based in the business hub of Manurewa, South Auckland, New Zealand.

We are delighted to have many clients in Manurewa and Manukau City, as well as in the wider Auckland region and New Zealand and abroad.

We think the best evidence of the value we add comes from our clients themselves. Our nomination and final position as First Runner up of the highly competitive and prestigious Regional Law Firm of the Year Award 2007 depended on our clients' endorsements of our work.

Region: Auckland

Phone: 09 269 2844

Attewell Clews & Cooper

Attewell Clews & Cooper is one of Whakatane’s largest and longest standing law firms. Our team embrace a culture of relaxed professionalism and share a common goal to provide high quality legal advice that is both practical and understandable. 

We are committed to being at the top of our game to ensure that our clients receive accurate and up-to-date legal advice.  We understand the world is online and use fore-front technology to achieve greater productivity and efficiency.  We encourage contact via email and text message, use an online legal library, have an intuitive practice management system and encourage our clients to pay online.

It is important to us that we understand your business and your unique individual (and family) situation. We work hard to provide sound legal advice that is tailored to your business industry and your personal goals. You will see us out and about in the community supporting local businesses, schools, community and sporting events. Talk to us today to find out how we can help you.

Region: Bay of Plenty

Phone: 07 307 0570

Argyle Welsh Finnigan

Argyle Welsh Finnigan is a leading law firm in Ashburton,  the town servicing mid Canterbury, New Zealand.

The firm employs a team of over 25 legal professionals, including three Senior Associate Solicitors, three Staff Solicitors and five Legal Executives.  Our firm provides quality legal services with a commitment to our clients and to understanding their individual needs and requirements. 

With more than one hundred years of combined legal experience, we are able to offer prompt and professional advice on a wide range of legal matters.

Region: Canterbury

Phone: 03 308 8228

Purnell Lawyers

There is nothing as inevitable as change. Since opening for business early last century, we at Purnell Lawyers have seen many changes both in name and in the people who have made up the members of our team. We have been privileged to have served the public throughout all of these times. 

We are confident that we will continue to bring top quality legal services to our clients well into the future.

Region: Coromandel

Phone: 07 868 8680

Woodward Chrisp

At Woodward Chrisp we strive to meet the needs of our clients by providing a wide range of high quality legal services within a supportive and collaborative environment.

Woodward Chrisp is the amalgamation of two long established Gisborne legal firms: Woodward Iles & Co and Chrisp and Chrisp. Today’s partners are Ross Revington, Adam Simperingham, Jeff Allen and Ellie FitzGerald.

Region: Gisborne

Phone: 06 869 0900

NZ LAW Limited

NZ LAW Limited is an association of independent legal practices with member firms located throughout New Zealand. There are currently 53 member firms practising in a wide range of legal disciplines ranging from business law, home buying and selling, immigration law and intellectual property to aviation law and viticulture.

The group was established in 1992 when about five law firms met in Auckland to find a way to benefit their clients by replicating the conviviality and the sharing of ideas and expertise that occurs in larger law firms, but still be able to retain client confidentiality and their own independence.

Region: Hawke's Bay

Phone: 06 835 5299

BMC Lawyers

BMC lawyers has built a reputation for providing quality service and delivering real results. Our strength is our broad-ranging legal experience that gives us the ability to match clients with the right mix of legal skills for their particular needs.

Our legal professionals are passionate about what they do and work alongside a talented team of support and administration staff to make a real positive difference to our clients.”

Region: Kapiti Coast

Phone: 04 296 1105

Horsley Christie

Horsley Christie is a successful law firm based in Whanganui which offers a diverse range of legal services to the Whanganui Region and beyond and has done for over 100 years.

When you deal with Horsley Christie you do so in the knowledge that the firm is one of many law practices nationwide who are members of NZ LAW.

Region: Manawatu - Wanganui

Phone: 06 349 0090

Wain & Naysmith

Based in Blenheim, Wain & Naysmith Lawyers is a full service law firm, and a powerhouse for property, family and business law.

We pride ourselves in providing clear and cost effective legal solutions and practical advice for you, your family and your business.

Region: Marlborough

Phone: 03 520 6103

Knapps Lawyers

As a firm, we promise to look after you and treat you in a manner that we would expect to be treated by a professional services provider; we promise to use every available legal remedy available to us to resolve your issue and to do what you ask us to do in a timely manner.

We will hold in strict confidence all information that we acquire through our work for you and which concerns your business or personal information.  The only exceptions are where you authorise us to disclose such information or where we must do so by law.

Region: Nelson

Phone: 03 544 7888

Thomson Wilson

Thomson Wilson is a full service law firm based in Whangarei. We’ve been trusted lawyers for the Northland community and beyond for 75 years.

We act for individuals and families, businesses, public sector and other organisations. Whether you need no-fuss advice on a simple matter, or a team of legal experts. 

Our staff provide advice in most areas of the law, including property law, business law, trusts and estates, separation and divorce, resource management, criminal law and more.

We also offer expertise in specialist areas such as Maori land, local government law, farming and forestry.

Region: Northland

Phone: 09 430 4380

Sumpter Moore

Sumpter Moore is based in South Otago and has a proud history of having provided a broad range of legal services to personal clients and businesses since 1873. Generations of families have been able to rely on our advice and assistance, because Sumpter Moore has stood behind that advice for over 100 years.

Sumpter Moore has fully serviced offices in both Balclutha and Milton, our relatively small size means we can work closely with our clients and you know who will be personally responsible for your legal affairs. It allows us to have close control over the quality and timeliness of the advice you receive.

Region: Otago

Phone: 03 418 0066

Sheddan Pritchard Law Ltd

Incorporating traditional values and a fresh perspective, Sheddan Pritchard Law is here to assist you with all your legal needs. 

Our friendly and team-driven approach underpins our firm’s values, recognising the importance of putting people first and allows us to connect and nurture professional relationships with new and existing clients within our local community of Gore, as well as throughout New Zealand and extending overseas.

Region: Southland

Phone: 03 209 0030

Welsh McCarthy

Welsh McCarthy practises in Hawera, South Taranaki. Predominant industries in the South Taranaki district are dairy farming, oil and gas. The South Taranaki area also has the largest one-site multi product milk processing facility in the world

We deal with company and commercial transactions, commercial and family law, farm and residential sales and purchases, estate planning and family and charitable trusts. A large part of the firm also deals in the area of family law.

Region: Taranaki

Phone: 06 278 5039

Allen Needham & Co Ltd

Sir Stephen Allen, founder of the firm, was admitted to the bar on the 7th of December 1906 and subsequently set up practice in the building illustrated below on the present site of our offices at 52 Canada Street, Morrinsville on the 1st of January 1907.

Mr Arthur Needham was admitted to the bar on the 1st of March 1923 and Mr R. B. Morton on the 24th of November 1924. They joined Sir Stephen in partnership under the name of Allen, Needham & Morton.

The firm was subsequently called Allen, Needham, Sanford & Lang when the partners of the firm were John Needham (son of Arthur Needham, and father of Rod Needham, a present partner), Howard Sanford, Fred Lang and Graeme Ashmore.

Graeme Ashmore left the firm in 1972 and Howard Sanford retired as a partner in 1974 when Greg McDonnell became a partner with John Needham and Fred Lang.

The firm changed its name to Allen, Needham & Co. in 1986 when new partners Rod Needham and Bob Craven joined the firm. In December 2010 the firm became an incorporated company.

Region: Waikato

Phone: 07 889 5062

Gawith Burridge

Gawith Burridge traces its history back to 1875 when Charles Gawith first set up his practice. Since then the firm has undergone many changes, including a merger between Gawith & Co and Burridge & Co in 1998 to form our current practice.

Our firm draws on the breadth of expertise available from some of the region’s most senior legal practitioners, as well as the skills of those who have moved here from larger corporate environments.

As a result, we provide clients with a comprehensive range of legal services right here in the Wairarapa. We can provide you with legal assistance whether you are an individual or a company, with everything from setting up a Will to selling your farming business. 

Region: Wairarapa

Phone: 06 370 0000

Gillespie Young Watson

We specialise in Property, Commercial and Trust Law. When it comes to law firm size we are bigger than smaller and smaller than big. By limiting the work we do to our specialist areas, we like to think we bring together the best of big firm skill sets with the personal care, attention and relationships of small firms.

We expect our clients to receive clear, practical and timely advice. We place a premium on accessibility and convenience to our clients. We value and appreciate all of our clients and want to do the best possible job for each of them. When we close a file we want the client to feel they have received exceptional advice, service and value.

Region: Wellington

Phone: 04 569 3997

Hannan & Seddon

The Law Firm of Hannan & Seddon dates back to September 1867.

The firm's offices were in Werita Street from 1867 until 1982 when the firm moved to Tarapuhi Street and then to its current spacious premises at 61 Guinness Street in 1998.

The name Hannan comes from Mr Michael Hannan whose son John Hannan (Jack) joined the firm in 1908. Jack Hannan remained in partnership until he passed away in 1974 at the age of 90!

The name Seddon comes from Mr T E Y Seddon (son of Premier Richard John Seddon from Kumara) who joined the firm in the 1920's. The other prominent Solicitor at Hannan & Seddon was Cyril McGinley who joined the firm in the late 1920’s and retired as a Consultant in 1997 aged 87.

Currently we have two Partners within our firm. Tony Sullivan who has been with us for 29 years and Colin Smith, 26 years. The firm also has two long serving Legal Executives Elaine Knowles and Beverley Walsh.  

Region: West Coast

Phone: 03 768 4169

All the information published on this website, or in any article herein is true and accurate to the best of the authors' knowledge. Information on this site should not be a substitute for legal advice. No liability is assumed by NZ LAW Limited, or individual NZ LAW member firms for losses suffered by any person or organisation relying directly or indirectly on information published on this site. Views expressed in any article are the views of the authors individually and do not necessarily reflect the view of NZ LAW or their member firms. Information appearing on this site may only be reproduced with prior approval from NZ LAW Limited Head Office, and credit being given to the source. © NZ LAW Limited