Family Trusts Protect in cases of Divorce or Separation
Good on you! You’ve managed to buy a house. Your initial thoughts are to become a property investor where you can build up the equity in your home and use that equity to leverage yourself into other properties and increase your wealth steadily over time.
At the time you purchased your house, a family trust was not at the top of your mind. Protecting your assets seemed boring and something you could get to ‘later’.
But the fact is, that life events like a relationship split can not only be emotionally damaging, but financially damaging too.
Look at this story below to illustrate.
Samantha hadn’t had an easy time of it lately. Both her parents had died in the last couple of years and she felt quite alone. The only silver lining in the black cloud was that she no longer had to worry about money.
Her parents had left her their house and their life insurance had paid off the mortgage so she had a pretty good start in life.
Black clouds don’t last forever. Samantha finally met the love of her life and she felt like the luckiest girl in the world when David asked her to marry him. Things went well over the next few years for them. They had two lovely children and sold Samantha’s old family home and bought a new one for them all to live in.
Then events started to unravel. First, David lost his job. Then when he got another job he seemed to work really long hours. Things became strained between them. Finally, David told Samantha he was leaving.
If that wasn’t bad enough, David wanted the house sold and half the sale proceeds so he could purchase a home for himself.
Samantha didn’t think this was fair. The home they now had was mainly paid for by the sale proceeds she’d got when she sold her parent’s old home. David didn’t see it that way and the battle between the lawyers began.
Eventually, Samantha and David settled their differences in Court. The Judge ruled their home had to be sold and the sale proceeds had to be split 50 / 50.
The Judge said that Samantha had ‘intermingled’ the sale proceeds she’d got from her parent’s old home to the point where those proceeds had become ‘relationship property’, which was to be split evenly between them.
Janet Xuccoa BCom LLB, is a director from Gillgan Rowe + Associates. She is a recognised Family Trust and LAQC expert in New Zealand where she leads the Trusts and Estate Planning division. Want to protect your assets and grow your wealth? Get your Free Family Trust Report: “The 9 Deadly Sins of Setting Up a Family Trust”.
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