Trusts & Section 182
Nuptial Settlements and Post-Separation Trust Claims
Section 182 of the Family Proceedings Act 1980 gives the court broad power to vary nuptial settlements — including family trusts — after a marriage or civil union ends. Understanding this risk is essential to protecting your assets.
What Is Section 182?
Section 182 of the Family Proceedings Act 1980 gives the Family Court power to vary any "ante-nuptial or post-nuptial settlement" when a marriage or civil union is dissolved. In plain English, if a trust was created during or in anticipation of your relationship, the court may be able to change its terms — including who benefits from it and how the assets are distributed.
The courts have interpreted "nuptial settlement" broadly. A family trust set up during a marriage — even one with no explicit connection to the marriage — can be treated as a nuptial settlement if the court considers it was made in the context of the relationship. This means the trust assets you thought were protected may be vulnerable to claims by your former partner.
This power exists alongside — and is separate from — the relationship property regime under the Property (Relationships) Act 1976. A spouse or partner may use s 182 even where the Property (Relationships) Act does not give them a direct claim against the trust.
Key Issues to Understand
The courts have taken a broad view. A family trust settled during a marriage or civil union — or in contemplation of one — may qualify, even if the trust deed makes no reference to the relationship. The key question is whether the settlement was made in connection with the marriage or civil union, or was intended to provide for the parties or their children.
Trusts settled well before the relationship, or by a third party with no connection to the relationship, are less likely to qualify — but the boundaries are not always clear.
The court has broad discretion. It can vary the terms of the trust, extinguish interests under the trust, or resettle trust property — essentially rewriting the trust to achieve what the court considers a fair outcome. This can include redirecting income or capital to a former spouse or partner, or removing a party as a beneficiary entirely.
Section 182 operates independently of the Property (Relationships) Act 1976. A former spouse or partner may pursue claims under both regimes simultaneously. Where the Property (Relationships) Act cannot reach trust assets directly, s 182 may provide an alternative route. This means that even carefully structured trusts may not be immune from relationship property claims.
Anyone who has settled assets into a trust during a marriage or civil union — particularly where the trust holds the family home, business assets, or significant investments. The risk is higher where the trust was clearly created for the benefit of the family unit, where both partners have been beneficiaries, or where the settlor retained significant control (see alter ego trusts).
If you created a trust before you were in a relationship:
- The rights and powers you hold under that trust deed will usually start out as separate property under the Property (Relationships) Act; and
- The trust will not automatically be a nuptial settlement just because you later marry.
However:
- If you add your partner as a beneficiary of the trust, it may become nuptial for s 182 purposes; and
- Even if it remains separate property, the PRA tools (such as s 44 and s 44C) can still apply if relationship property is moved into the trust in a way that undermines the other partner's rights.
Getting early advice before you marry, enter a civil union, or move significant relationship assets into an existing trust is crucial.
Practical lessons from key decisions are helpful:
- Ward v Ward (Supreme Court) — confirms the broad and flexible nature of s 182 in relation to nuptial settlements. The focus is on what was reasonably expected when the settlement was made, and whether that expectation has been defeated.
For clients, the key point is:
The more carefully your trust and relationship property arrangements are designed and administered, the less likely it is that a Court will need to use its more intrusive powers.
How recent cases guide the Court’s approach
Practical lessons from key decisions are helpful:
Ward v Ward (Supreme Court) – confirms the broad and flexible nature of s 182 in relation to nuptial settlements. The focus is on what was reasonably expected when the settlement was made, and whether that expectation has been defeated.
For clients, the key point is:
The more carefully your trust and relationship property arrangements are designed and administered, the less likely it is that a Court will need to use its more intrusive powers.
How We Can Help
Whether you're concerned about protecting your trust from future claims, or you're already facing a separation and need to understand your position, we can help. We review your trust structure, assess the risk of a s 182 claim, and advise on steps to reduce your exposure — including restructuring the trust, updating beneficiary classes, or other protective measures.
If you're setting up a new trust, we design it with these risks in mind from the outset — so you start with the strongest possible protection.
Concerned about your trust and relationship property?
Request a consultation — we'll assess your situation and advise on the best way to protect your assets. No obligation.