Vivienne Crawshaw: When families split, a trust comes into its own

Marie and Sheryl were together for 10 years and in that time they had two children, a girl each. Jade and Lizzie were conceived by artificial insemination and saw their fathers infrequently but often enough to know who they were and have some fun together.

Sheryl had wanted to get married (with the Civil Union Bill coming it seemed more than remotely possible) and was devastated when Marie confessed to be planning her departure.

Marie had fallen in love with a friend of a friend and what really choked Sheryl up badly was that the object of her desire was a bloke.

Marie tried to make the wound a clean one but Sheryl resisted.

Although the two women were able to agree that the girls should remain together and that they should share in their care, they were not able to be as pleasant about the details of that arrangement.

At Jade's parent interview, they barely heard a word the teacher said, so busy were they hissing at each other's interpretation of Jade's less than excellent results.

Sheryl insisted on being there for the entire week of Lizzie's school camp so that Marie felt unable to attend for fear of making a scene.

As Marie was Lizzie's biological mother this incensed her.

Sheryl suggested that if Marie really wanted to go she should be there for the whole week as she felt it was too disruptive if she went for only some of the time.

But Marie had work commitments (she was an overworked social worker) and in the end gave up, realising that it would only mean conflict for Lizzie.

When it was Marie's week to have the girls, Sheryl would telephone them and chat for hours on the internet so that neither Jade nor Lizzie were able to participate in family life with Marie and her partner.

Because it was Sheryl who had enrolled the girls in creative dance classes she insisted on taking them there and dropping them off whether or not the girls were with her or Marie. After some months of this Marie put her foot down and insisted that Sheryl back off. That led to an outpouring of stifled grief on Sheryl's part which had the opposite effect than that intended by Marie.

Sheryl decided to really cauterise the relationship and insisted their former home be sold.

Sheryl decided to see a lawyer.

The lawyer was sympathetic and explained that the court was able to attach conditions to the shared care arrangement the girls enjoyed and it was likely to do so in the interests of promoting their relationship with Marie. Sheryl's involvement was plainly disruptive even if it was in the guise of being there for the girls.

The house situation was more complex. Marie expected to get a half share. They lived in Devonport and she imagined the cottage would fetch around $750,000. They had no mortgage because when Sheryl's parents had died she had paid the last $250,000 owing to the bank.

Sheryl's parents had been cautious however and instead of leaving Sheryl the money outright had set up a family trust, making Sheryl and her brother beneficiaries. When her parents died the trust had received their inheritance.

Instead of simply paying off the mortgage, the trustees (wise folk) ensured that she and Marie signed an agreement borrowing the $250,000 from the family trust and at the same time Sheryl used the money from the trust at no interest to repay the balance owing to the bank.

The trust was now able to call up the loan and reclaim the amount her parents had effectively left to Sheryl. Marie was therefore entitled to only half of the value of the house, less the loan to the trust, which was well less than half of the amount she thought she would come out with.

If Sheryl's parents had simply left her the money in their wills and Sheryl had paid off the loan, Marie may well have enjoyed the benefit of half of Sheryl's inheritance. But that was not the case.

Once she came to terms with the blow Marie accepted the advice and the house was sold, she receiving only a one-third share.

Some of the heat went out of the resentment between the two of them after attending some fairly grunty counselling sessions, provided through the Family Court.

Although Marie knew that she was able to take things further through the court to sort things out, this did not prove to be necessary.

Sheryl's parents had planned wisely. They would have been saddened to see their daughter's heart broken, but sadder still to see her lose half of her inheritance to the heartbreaker.

Sheryl was also well advised when she made decisions about how to retain the funds left to her by her parents and at the same time reduce the loan to the bank.

* Vivienne Crawshaw is a family law specialist practising in Auckland.