Trust instruments that affect a marriage: are they valid?

The area of trust law can throw up a number of difficulties. This is especially if a trust instrument is created that affects a marriage or other family relationships.

The issues that may potentially arise under such circumstances can be rather thorny to put it mildly.

Types of trusts which may be void for interfering with a marriage (or family relationship)

Trusts which are created disturbing the welfare of a marriage will usually be considered as void.

For example, a trust instrument that is created requiring a person to separate from their spouse in order to receive a benefit may be considered void because it may encourage a beneficiary to initiate an action of divorce from their spouse. The High Court in Ramsay v Trustee Executors and Agency Co Ltd (1949) 77 CLR 321 arguably took a different approach and upheld a testator’s wish that his trustees convert his estate and to hold the proceeds in trust “…to pay the income…to my son…for such period…as he shall remain married to his present wife…and on the termination of such period in trust for my…son absolutely provided however that should my…son predecease his said wife during such period…my estate shall go to my…nephew…and my sister…in equal shares.”

The Court in Ramsay held that

“…this provision contained nothing which offended against public policy as having, or tending to have, an adverse effect on the son’s marriage and it was wholly valid.”

What are some of the public policy considerations?

In relation to public policy considerations, the law generally views clauses that require forfeiture of a life estate as contrary to public policy. Although in contrast, trusts that place a reliance on the beneficiary to marry to receive a trust, has been upheld as valid in some instances.

Public policy considerations generally view any trust that is constructed in a manner that would result in the separation between a parent and a child will be void. However, clauses that outline how a child should be raised – such as in relation to their religious upbringing for example – may not necessarily be considered as void under certain circumstances. 

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Disclaimer

This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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