Obligations to a spouse can overturn a property transaction

The issue of estate planning and Family Law are closely connected and it is imperative that people receive advice regarding their rights and obligations to their spouses before writing out their will (entering into succession planning arrangements). There is a risk that certain transactions may be overturned in court if it can be proved they were designed to defeat an existing or anticipated order in Family Law proceedings.

Case Study: Tabussi (As Executor of the Estate of the late Mr Tabussi Senior (Deceased) & Ors [2015] FCWA 108 (8 December 2015)

The case of Tabussi is interesting because the husband and wife never separated and the couple had been married for 35 years. While both parties owned separate property, they also owned property together. The wife had made significant contributions to their life together, including a partnership in a trucking business; contributions as a homemaker; and had nursed her husband through his terminal illness.

Just prior to the husband’s death, the wife discovered he had secretly transferred ownership of a property he owned prior to the marriage to the children of his first marriage. The property had remained in the husband’s name and it was also the biggest asset. The wife initiated proceedings in the Family Court of Western Australia seeking to set aside the transfer of property on the grounds that its purpose was to defeat her Family Law entitlements. The husband died nine days after the wife filed her application in Court and the husband’s estate then defended the proceedings.

The wife was successful in overturning the transfer of property. The Court decided that it was reasonable for the husband to have forseen that his wife would make a claim for property settlement when she found out about the transfer of property and his actions of secrecy supported this view. With the property then assigned to the assets for division in the property pool, the judge awarded the wife 55 per cent of the combined net asset pool and the husband’s estate received 45 per cent.

Some important facts highlighted by this case are:

1. Family Law proceedings must be initiated prior to the death of the spouse or former spouse;
2. The Court has the power to overturn transactions made with third parties in certain circumstances;
3. The Court has the power to adjust the legal interests to properties of the couple and even third parties.
4. It is essential to consider Family Law implications when succession planning, even in intact marriages and/or relationships.
5. A couple does not need to be separated for the Court to make orders concerning the adjustment of property interests.
6. The fact that a claim by a spouse may be anticipated is enough, in some circumstances, to overturn a transaction if it was designed to defeat an anticipated claim.

Streeterlaw’s Family Law solicitors are keen to ensure their clients are kept up-to-date on developments in the law that may impact them. Please contact us if you need any advice on succession planning and your Family Law obligations by calling 8197 0105 or you can email advice@streeterlaw.com.au.