NSW Could Revocable Living Trust be an Option to Defeat FPA?

[winston wolf]

Hi all,

It has recently been suggested that a Revocable Living Trust could be an option to defeat Family Provision Claims? Although I doubt it would be effective in NSW due to the notional estate provisions would it move assets outside the the estate in other jurisdictions?

I have see many references to this trust on US based websites but am unsure if they are an option in Australia.

Thanks

 

[Tim W]

Suggested where?

The key thing to consider in this area is that the onus is on the applicant
to prove that they have not been adequately provided for
(even if their share is less (an)other beneficiary(ies).

It may also be helpful to contemplate that the raisons d'etre
of the two instutitions are different.

Family Provision and Notional Estates (NSW style) are concepts born of equity
(even if they now have a statutory basis).
By contrast, Living Trusts (such as you see in, say, California),
are about tax avoidance.

In Australia, there is less need for that because,
if set up properly, estates almost never involve
CGT events for the heirs, and there is little in the way of
death duties or like taxes to worry about.

 

[winston wolf]

Thanks Tim

It was raised at ChangeFPA.

The poster suggested that a recoverable living trust would remove assets from an estate for the purpose of an FPA claim yet still maintain control up until death. I suggest the notional estate provision in the NSW succession act would bring the trust back into the estate if it was necessary to satisfy a claim. But it may be a method of estate planning for other states. I understand that even a testamentary trust can be included in most states, even without the notional estate provision.

I haven't often seen trust come up in FPA claim cases or when they have the rest of the estate has been sufficient to satisfy the claim and the trust is just taken into consideration when making the re-distribution.

 

[Tim W]

Nah, I don't see the courts wearing that as an interpretation.

Consult your textbooks on statutory interpretation.
As a general thing, where one bit of law has the unintended (and non-express) effect
of impeding the operation of another bit of law, the court will tend to read down the conflicting one,
to try, as far as possible, to give effect to both, or at least, to give effect to Parliament's intention.

In this case, I don't see the use of trusts (any kind, except, maybe, testamentary trusts)
as being allowed to operate where the operative effect would be
to conceal or isolate assets from an otherwise valid Family Provision claim.