Barrie Hayes, Partner

In many marriages the matrimonial home is the most significant family asset owned by the spouses. The Family Law Act (“FLA”), in dealing with equalization of net family property on separation, provides special treatment of the matrimonial home.

Whereas generally  a spouse may deduct from his or her net family property the (net) value of the property he or she brings into the marriage, this deduction of property does not extend to the matrimonial home. Further statutory exclusions from family asset inclusions such as inheritances or gifts from third parties do not extend to the matrimonial home.

In situations  where parents purchase a home for a child or grandchild, and wish to protect the home from being included in the equalization of net family property in the event of marriage breakdown consideration should be given to using a trust to protect the home from a potential FLA claim.

In the recent case of Spencer v Riesberry a home was purchased and was settled on a trust for the purchaser and her four children. Three additional properties where subsequently also settled on the trust. One of the terms of the trust was that any trust property distributed from it was not to form part of the recipient’s net family property for purposes of the FLA.

When one of the daughters who occupied one of the homes settled on the trust separated the court was asked to determine whether the daughter had an interest in the property sufficient to warrant a finding that the property was a matrimonial home. The Court of Appeal held that, unless the terms of the trust expressly provided otherwise, a beneficiary has no property interest in any specific asset of the trust, prior to or absent an appropriation of such assets to the beneficiary by the trustee.

The court considered the daughter’s dual role as beneficiary and as co trustee of the trust and held that occupying those positions did not provide the daughter with an interest in the home for the purposes of the FLA.