In the event of a relationship breakdown or separation, protecting personal assets becomes a significant concern. In New South Wales (NSW), asset protection involves strategic planning and legal measures to safeguard personal wealth from potential claims by a former spouse or partner. This article explores the various steps individuals can take to protect their personal assets before and during a relationship, the legal considerations under NSW law, and a case study illustrating the complexities and financial implications of asset protection in a separation.
Protecting personal assets requires proactive planning and understanding of the legal landscape in NSW. Here are some essential steps to consider:
In NSW, several legal considerations are crucial for protecting personal assets during a separation:
When it comes to protecting personal assets during separation, emotions often run high, especially if one party feels their financial security is threatened.
In a notable NSW case, a couple who had been married for over a decade found themselves in a contentious battle over asset division. The husband, who had substantial personal assets before the marriage, had established a trust to protect his wealth. However, the wife argued that the trust was set up to deprive her of a fair share of their joint assets. Feeling desperate and betrayed, she fought to have the trust declared invalid, citing her contributions to the family and the marriage.
On the other side, the husband expressed his frustration, feeling that his efforts to protect his assets were being unfairly challenged. He maintained that the trust was established with full transparency and legal guidance, not as a means to exclude his wife from their financial arrangement. His growing anxiety about the potential loss of his personal assets and the impact on his financial future was evident throughout the legal proceedings. This case illustrates the emotional turmoil and desperation that can accompany disputes over asset protection during separation.
The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.
Case Overview
In the case of Evans v. Evans [2023] NSWSC 1123, the NSW Supreme Court was asked to rule on the validity of a trust established by the husband before marriage. The trust, valued at approximately $3 million, was set up to manage the husband’s business and personal investments. Following their separation, the wife claimed that the trust was a sham designed to hide assets and sought a court order to include the trust assets in the property settlement.
Behaviour of the Participants
During the court proceedings, the emotional stakes were high. The wife, who had left her career to support the husband’s business and care for their children, felt betrayed by the existence of the trust. Her desperation was evident as she described her financial uncertainty and the fear of being left without adequate support after years of contributing to the family.
Conversely, the husband argued that the trust was established well before the marriage and was a legitimate vehicle for managing his personal and business assets. He expressed frustration over what he perceived as an attack on his financial independence and efforts to protect his wealth. His anxiety about the potential unraveling of his financial plans was palpable, particularly given the possibility of losing control over assets he had worked hard to accumulate.
Legal Process and Court Involvement
Due to the complexities of the trust structure and the allegations of deceit, the matter was brought before the NSW Supreme Court. The court engaged forensic accountants and legal experts to examine the trust’s formation, management, and purpose.
After extensive analysis, the court found in favor of the wife, ruling that the trust was indeed a sham and had been established to defeat her claim to a fair share of the marital assets. The court ordered that the trust assets be included in the property settlement, significantly impacting the division of assets.
The court’s decision had significant financial consequences for both parties. The inclusion of the trust assets in the property settlement resulted in a 50/50 division of the $3 million, substantially altering the husband’s financial plans. He was required to liquidate some of the trust assets to meet the settlement requirements, leading to significant financial losses due to market conditions.
The legal battle itself was also costly, with both parties incurring legal fees exceeding $250,000. The husband’s efforts to protect his assets ultimately backfired, resulting in a more significant financial outlay than if he had agreed to a fair settlement initially. The wife, while gaining a more substantial financial settlement, also faced substantial legal costs that reduced the net benefit of her victory.
The following statistics provide insight into asset protection and division in NSW:
Government Resources
Non-Profit Organisations