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Attacking Trusts upon Divorce and in Maintenance Matters: Guidelines for the Road Ahead

In this article the different theoretical bases for attacking trusts upon divorce and in maintenance matters are set out. Firstly, the field of application and the consequences of the remedy of declaring a trust a sham are investigated, and secondly, the field of application and the consequences of the remedy of piercing the trust veil are looked at. Next, the South African matrimonial property law and maintenance cases in which attacks were launched on trusts are discussed chronologically. The decision in each case is compared with the theoretical bases of the two relevant remedies so as to indicate where the courts erred and where they made commendable decisions. In the conclusion the possibility of attacking trusts is viewed from the perspective of gender equality and the best interests of the child. Reference is also made to alternative methods which might be applicable, but the conclusion is made that the court’s powers to either declare a trust a sham or go behind the trust form, if applied correctly, would suffice as appropriate remedies for attacking trusts in maintenance matters and upon divorce. Courts should, however, not shy away from their duty to give due consideration to any alter ego allegations and use their power to pierce the trust veil upon divorce and in maintenance matters to curb the abuse of the trust form. Similarly, courts should be vigilant about finding that a trust in question is a sham where it is clear that the founder had no intention of creating a trust but acted solely with the purpose of placing all assets out of the reach of a spouse or maintenance creditor. Where no abuse of the trust form has been proved and the true intention to create a trust is evident, trusts should, however, be free from attack upon divorce and in maintenance matters.