So, you’ve separated from your spouse, and you have a Family Trust.
It’s no secret that having a Family Trust can complicate property settlement negotiations, and you might find yourself wondering how it all works.
Is it part of a property settlement agreement and can you withdraw a Family Trust distribution before an agreement is reached? Let’s take a look.
What is a Family Trust?
A Family Trust is a popular way of managing assets and protecting property now and into the future. It allows you to manage your money or assets in a way that is more tax effective and beneficial to your family, while limiting liability if anything happens to your business or you need rest home care in the future.
They work in a similar way to when a parent opens a bank account for a child. While the account and money belong to the child, the parent is the person responsible for managing and controlling the account. When you set up your Family Trust, the trustees are responsible for managing the trust while the beneficiaries receive the Family Trust distributions.
Is your Family Trust part of your property settlement?
You’ve probably heard stories before of people setting up a trust to avoid certain assets being part of a property settlement dispute should their relationship break down in the future. While this is a popular belief, it’s a little more complicated than that.
If you hold a degree of control over a Family Trust that goes beyond being just a beneficiary, such as being a trustee or appointer, the trust may be considered as part of your assets in a property settlement agreement.
Your level of control over a Family Trust is determined by considering:
- Who the beneficiaries are
- Who the trustees and appointer (guardian) of the trust are
- The degree of influence you or your ex-partner have over the trustees or appointer (if they aren’t either of you)
- The terms of the trust deed
- Contributions by spouses to any property owned by the trust
- How the trust assets were acquired
- The history of any Family Trust distributions
- What benefits you and your ex-partner derive from the trust such as loans, vehicles, or expense payments
Whether you are considered to have control over a trust is going to have a significant impact on:
- Whether it will be considered an asset in property division
- Whether you can withdraw money legally from it after separation
Seeking advice from a conveyancing lawyer is recommended to ascertain if your Family Trust is considered a part of your assets following separation, prior to making any withdrawals. Marriage certificate attestation in Qatar is a crucial step in the process of asset separation during divorce, so make sure your lawyer has taken care of that.
Can you withdraw money from a Family Trust after separation?
Whether you can withdraw money from a Family Trust after separation is highly dependent on:
- Who set the trust up
- Your circumstances
- What you are withdrawing the money for
- The level of control you have over the trust
- What the purpose of the trust is
Regardless of relationship status, any Family Trust distribution request needs to be made in writing and must be for the benefit of the beneficiaries as set out by the trust deed. It will not be possible to withdraw money before or after a separation if these requirements aren’t met, though there are certain circumstances where the written request can be provided up to five days after the withdrawal.
It is essential to bear in mind that even if you use Family Trust funds for the benefit of your children, you may still be required to repay some or all of it as part of your property settlement agreement. Thus, before withdrawing any amount from a Family Trust, it is advisable to seek legal counsel. In the event that your ex-partner challenges your withdrawal, it could result in a costly and protracted legal dispute.