WA Family Trust and Divorce - Am I Liable for His New Debt?

[Susanne]

Hi,

I am separated from my husband since January 2016. We have a Family Trust in which I am named as a Trustee. We have had two unsuccessful businesses since 2010. There is no money in the trust, only loss.

My husband wants to run another business on the trust and needs a big loan to open the business. I want my name removed as I don't want to be liable if this new business won't be successful either.

1.) Is it justified to pay $ 500 just to get my name removed from the Trust?
2.) Am I still liable for my husband's actions even if my name is not in the Trust?
3.) In case of a divorce, as everything goes in the " assessment pool ", am I responsible for his new debt he made after we separated?

Thank you

 

[Victoria S]

Hi Susanne,

There are no fixed laws as to a spouse or ex-spouse's liability for debt in cases like this. It is either up to the two of you to divide your assets and liabilities through negotiations or if you can't decide, it's up to the court. If you applied to the family court to divide your joint assets, the court would determine what is just and fair in all the circumstances, and apportion the debts and assets between you regardless of whose name is on what.

Courts generally look at the assets at the time of separation. However, if debts or assets are acquired by either party after separation - sometimes these will also be included in the asset pool to be distributed to the other party. For example, if you ran up a credit debt on your own after separation on necessary household items - because your spouse took all of your joint household items - then the court may deem it fair to split it. But it will depend on each case.

 

[Susanne]

Thank you, Victoria.