Persons who have formed trusts to defeat their partners property claims should be concerned as In a recent high profile relationship property case, Clayton v Clayton  NZCA 30, the Court of Appeal held that a power of the trust’s settlor to appoint and remove trust beneficiaries was “relationship property” for the purposes of the Property (Relationships) Act 1976 (the Act). The value of the power was deemed to be the same as the value of the trust assets – in effect “busting” the trust.
The decision may yet be appealed to the Supreme Court. However, pending the outcome of any appeal, the decision has potentially significant implications for many other trusts in New Zealand which may have similar features to those in the case. The decision represents another means by which parties to a relationship split may pursue assets held in a trust. The decision will also be of interest to creditors looking to pursue the assets in a trust under which a debtor has an interest.”
Paul would be happy to discuss the aspects of this case and perhaps a solution to this issue.