How Can the Property (Relationships) Act Be ‘Trusted’? An Analysis of Trust Law and its Interface with Relationship Property Law

Abstract

Deficiencies in the Property (Relationships) Act 1976 (PRA) have led to allegations of sham trusts, alter ego trusts, the bundle of rights doctrine and illusory trusts. These claims are not the correct means to deal with the failure of legislation to fulfil its intention. They are ill-suited for trust law and are indicative of a growing pressure to allow access to trust capital, and to prevent excessive control of trusts defeating the rightful entitlement of a spouse to equal sharing of relationship property. In order to clarify the law of trusts and of relationship property this article recommends reform to s 44C of the PRA, to allow access to trust capital. It recommends repealing s 182 of the Family Proceedings Act. This article stands for the proposition that these reforms alone are insufficient. Indications of what constitutes intent to defeat rights should be included in s 44. Effective control of trust property by a defendant who is the claimants spouse or partner, should be an indication of intent to defeat rights that will allow the disposition to be set aside. These reforms will give effect to the purpose of the PRA and clarify trust law.

Keywords: Trust, sham, illusory, alter ego, relationship property.

JEL Classification: k00, k10, k30.