Entrepreneurs, businesspeople, company directors and professionals risk being sued because of their business activities. Is it a good way to protect the family home by putting it into the spouse’s name?
Ever since 1688, the Courts have protected assets placed by a husband in a wife’s name from claims by creditors and the Trustee in Bankruptcy, provided certain rules are followed.
In a recent case, the Federal Court upheld that principle of law known as the ‘presumption of advancement’.
In the case, the Federal Court denied the Commissioner of Taxation’s claim to recover a tax debt of $10 million against the wife of a venture capitalist in whose name a luxury mansion had been placed.
The venture capitalist husband followed the rules by not claiming an interest of any kind in the family home and by buying the house before the tax debt came about. That is, the husband did not buy the house in the wife’s name to defeat claims by the Commissioner.
When we say the husband ‘bought’, the husband took out a loan jointly with his wife, which was secured by a mortgage over the family home, but the title to the family home was put into the wife’s name only.
You may be wondering if this applies to the situation where a wife buys a house in the husband’s name or to partners in a same sex marriage or to ‘life partners’ (de facto couples)? The answer is – not as the law currently stands.
You might also note that it cannot be used to deny a husband an interest in the house, because the Family Law Act and after death the Family Provisions Act grant the husband an interest.
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