{"id":1821,"date":"2024-03-28T05:16:31","date_gmt":"2024-03-28T05:16:31","guid":{"rendered":"https:\/\/actinvest.com.au\/?p=1821"},"modified":"2024-03-28T05:16:31","modified_gmt":"2024-03-28T05:16:31","slug":"removed-super-no-longer-protected-from-creditors-court","status":"publish","type":"post","link":"https:\/\/actinvest.com.au\/index.php\/removed-super-no-longer-protected-from-creditors-court\/","title":{"rendered":"Removed super no longer protected from creditors: court"},"content":{"rendered":"

A recent Federal Court ruling has found that the transfer of super from a husband to his wife\u2019s superannuation account is no longer protected as an interest of the bankrupt in a regulated super fund under the\u00a0Bankruptcy Act 1966<\/em>.<\/p>\n

\"\"<\/p>\n

.<\/p>\n

Terence Wong, senior associate at Sladen Legal, said the court made the ruling in the decision of\u00a0Kirk as trustee of the Property of Smith (a Bankrupt) v Smith\u00a0<\/em>[2024] FCA 240 (15 March 2024) citing section 116(2)(d)(iii)(A) of the\u00a0Bankruptcy Act 1966<\/em>\u00a0(Cth) (Bankruptcy Act).<\/p>\n

\n

The facts of the case state the financial position of the husband\u2019s joinery business deteriorated in 2015, and creditors lodged caveats over the two properties owned jointly by the husband and wife. The business property owned by the family trust was sold and funds were paid towards their lawyer\u2019s trust account.<\/p>\n

At the end of 2015, the couple sought advice from their lawyers about future asset protection and proceeded to pay cash towards discharging the bank\u2019s mortgages over their personal properties, which they then sold to acquire another property in the wife\u2019s name.<\/p>\n

In 2016, the husband withdrew amounts from his super account into a personal bank account which was then contributed to his wife\u2019s super account and the husband was declared bankrupt in 2019.<\/p>\n

\u201cThe Court held that a loan to the wife was not a sham and was not available to the husband\u2019s creditors and that the wife was not entitled to greater than her 50 per cent joint interest in their real estate properties,\u201d Broderick said.<\/p>\n

\u201cWith regards to the superannuation, the court held that once the husband removed it from his superannuation it ceased to be a superannuation interest of the bankrupt protected from creditors under section 116(2)(d)(iii)(A) of the Bankruptcy Act and would have been available to the husband\u2019s creditors.\u201d<\/p>\n

Broderick said that under section 128B of the\u00a0Bankruptcy Act<\/em>, it was not disputed that the transfer of super from the husband to the wife was to either prevent property from becoming divisible among the husband\u2019s creditors and\/or hinder or delay that division process, or both.<\/p>\n

\u201cProperty held by the bankrupt on trust for another person is also protected from division among the bankrupt\u2019s creditors under section 116(2)(a) of the Bankruptcy Act,\u201d he said.<\/p>\n

\u201cIt was alternatively submitted that the superannuation amount was subject to a Quistclose Trust in favour of the wife, however, the court found there was no evidence of any mutual intention of any specific purpose for any trust funds such that if the transfer to the wife\u2019s superannuation failed the trust money would be returned to the husband\u2019s superannuation account, and therefore this argument was rejected.\u201d<\/p>\n

He added that if the super had not been removed by the husband it would have remained protected from his creditors under section 116(2)(d)(iii)(A) of the\u00a0Bankruptcy Act<\/em>.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Keeli Cambourne
\n28 March 2024
\nsmsfadviser.com<\/p>\n

\u00a0<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

A recent Federal Court ruling has found that the transfer of super from a husband to his wife\u2019s superannuation account is no longer protected as an interest of the bankrupt in a regulated super fund under the\u00a0Bankruptcy Act 1966<\/em>.<\/p>\n","protected":false},"author":1,"featured_media":1822,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1821"}],"collection":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/comments?post=1821"}],"version-history":[{"count":1,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1821\/revisions"}],"predecessor-version":[{"id":1823,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1821\/revisions\/1823"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media\/1822"}],"wp:attachment":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media?parent=1821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/categories?post=1821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/tags?post=1821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}