The Ex-Files: What are my rights to relationship property when it is owned by a family trust?

OPINION:

Q: I am separating from my partner due to his gambling addiction. I want to register a notice of claim on our family home, which is owned by my partner's grandparents' trust.

We have been making contributions to the family home for many years, through loan repayments.

I have also contributed significantly to a family boat owned by the trust. The trust purchased it before our relationship began, but most of the boat loan was repaid by us during our relationship.

Although my partner's parents set up the trust and are the trustees, the trust is controlled by my partner.

What claim do I have to the family home and boat? Can I be forced out?

A: The existence of a family trust in this situation complicates matters. I advise anyone in a similar position to consult a lawyer. The advice will depend very much on your specific circumstances.

Notice of claim

I would first consider a notice of claim. This is a document which can be lodged against the title of a property to prevent the owner from selling the property. It is a powerful tool, if used properly.

You can lodge a notice of claim under the Property (Relationships) Act 1976 on the basis that you have an interest in the property pursuant to the Act. For example, you have an interest because the property is the family home.

However, the provisions of the Act generally apply to property personally owned by the parties to relationship. Since your family home is owned by a trust, it is not a straightforward application. Trusts may cause problems in getting a reasonable resolution.

While there are claims you could possibly make against the trust for compensation, you do not have a clear pathway to an interest in the property. For that reason, you are unlikely to be able to lodge and sustain a notice of claim. That said, further factual analysis would be required before making any final decision.

Factual analysis

You said that you have been making substantial payments on the mortgage. Those payments need to be investigated, and documentation found.

This investigation requires evidence in the form of bank statements, financial analyses, emails and texts that may span many years. You will need to engage a forensic accountant.

It may be that the trust documents could reveal whether you are also a beneficiary of the trust, and whether there is any current beneficiary to which you could make a claim.

It is unclear to me why the property is still in the name of your partner's parents. Was there ever an agreement for the property to be transferred?

Apart from payments on the mortgage, have you also done other things to improve the property? Examples could be renovations on the kitchen, bathroom or deck, or the addition of a bedroom.

Constructive trust

These circumstances may give rise to a different type of claim, such as a constructive trust.

A constructive trust is a remedy whereby the Court holds that one person holds property as a nominal owner for the benefit of another.

A constructive trust claim can be made on the basis of contributions made to property with the expectation of a benefit.

Your approach

I consider that it is always good to stay in the property if you are going through a dispute. You can discuss matters directly, rather than use lawyers or other professionals from the outset.

However, I recognise that it is impossible for some people where family violence is involved.

How well do you get on with your parents-in-law? Can you have a civil conversation with them or a third party to try and resolve matters?

Can you exchange information with your partner and his parents to avoid having to consult lawyers at this stage?

An amicable approach favours a quick, inexpensive resolution.

This article was first published with the NZ Herald.

Related Posts.

TRUSTS: The Details

Apr 7, 2015
Divorce
News
Relationship Property
Trusts
Can the rich and famous get spousal support after a divorce?

Divorce
Dec 4, 2020
Child Support
Relationship Property
Separation
Spousal Maintenance

Ready to Get Things
Moving?

Request a consultation, we'll take care of it.