Section 44: Hiding Assets in a Trust
Trusts are commonly used to protect assets, particularly at the start of a relationship.
But where property is transferred into a trust in a way that limits the other partner’s rights, the law may intervene. Section 44 of the Property (Relationships) Act exists to prevent unfair outcomes where assets have been moved beyond reach.
This article explains when section 44 applies and how the Courts approach these cases.
What is section 44 of the Property (Relationships) Act?
Section 44 is aimed at deliberate attempts to put property beyond the reach of a partner.
It allows the Court to step in where one person has transferred property — often into a trust — knowing that the effect would be to reduce or defeat the other partner’s relationship property claim.
This section exists to stop people from using trusts as a shield in circumstances where that would be unfair.
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When does section 44 apply?
Section 44 can apply where both of the following are present:
- one partner has disposed of property
(for example, by transferring it into a trust); and - the transfer was made with the intention of defeating the other partner’s relationship property rights.
This does not require bad behaviour or malice. What matters is knowledge of the effect, not motive.
Why section 44 is different from section 44C
Section 44 claims are more powerful than a similar claim under section 44C (which has an easier threshold to cross when making the claim, but less powers once triggered, learn more here).
Unlike section 44C, section 44:
- can apply to any property, not just relationship property; and
- can apply even if the transfer happened before the relationship began.
What can the Court do under section 44?
If section 44 is established, the Court has very wide powers.
It may:
- set aside the transfer entirely;
- treat the property as if it were still relationship property; or
- order compensation from other assets.
Because of this, section 44 is considered one of the strongest remedies available in trust-related separation cases.
A real example: Sutton v Bell (2023)
The Supreme Court decision in Sutton v Bell is now the leading authority on how section 44 works.
The background
- Mr Sutton and Ms Bell were in a de facto relationship for seven and a half years and had two children together.
- Just before they began living together, Mr Sutton transferred his home into a trust.
- Shortly before doing so, Mr Sutton had won a raffle that included a free consultation with a lawyer.
- During that consultation, he was advised to set up a trust and transfer the property into it.
The timing was very tight:
- the trust was settled on 9 November 2004;
- the property was transferred on 29 November 2004; and
- the Court found the de facto relationship began sometime between December 2004 and January 2005.
In other words, the gap between the transfer and the start of the relationship may have been only days.
The argument
Ms Bell argued that the transfer of the home into the trust was done to defeat her future relationship property rights, and that section 44 should apply.
She was successful in the Family Court, the High Court, and the Court of Appeal. Mr Sutton then appealed to the Supreme Court.
The Supreme Court was asked to decide three key questions:
- Can section 44 apply to a transfer made before a relationship formally begins?
- If so, when does section 44 start to apply?
- Was this particular transfer made with the intention of defeating Ms Bell’s rights?
What the Supreme Court decided
The Supreme Court confirmed that section 44 can apply to transfers made before a de facto relationship begins. There is nothing in the wording of section 44 that limits it to transfers made after a relationship starts.
That is different from other sections of the Act, which only apply to relationship property.
However, the Court rejected the idea that section 44 is triggered simply because a couple decides to live together.
Instead, it set a more careful test.
The key question is whether, at the time of the transfer, there was a “clear and present intention to become parties to a de facto relationship.”
If that level of certainty exists, section 44 can apply… EVEN if the relationship has not technically started yet.
In Sutton v Bell, the Court found that such an intention clearly existed. Within two months of the transfer:
- the parties had been on holiday together;
- they had conceived their first child; and
- they had asked a flatmate to move out of the home.
Intention to defeat the claim
The Supreme Court also confirmed that the long-standing test from Regal Castings applies to section 44.
That test says it is enough if the person transferring the property knew that the effect of the transfer would be to defeat the other partner’s relationship property rights.
There does not need to be an intention to harm or disadvantage the other person.
In this case, the Court found that Mr Sutton knew transferring the home into a trust would prevent Ms Bell from making a future claim over it. That knowledge was enough.
Importantly, the fact that Ms Bell knew about (or even consented to) the transfer did not stop section 44 from applying.
The Clean Break approach
At Clean Break, we understand that dealing with trust property after separation is not just a complicated legal puzzle. How this is resolved will significantly impact your financial situation in the future.
We focus on:
- explaining the law in language you can actually understand;
- identifying realistic options (not false promises); and
- choosing the right legal pathway for your situation.
Our approach is grounded in our three core values:
Help, never hurt
We aim for solutions that protect you without escalating conflict unnecessarily.
Excel and improve
Trust law is complex and constantly evolving. We stay sharp so you don’t have to.
Find the joy
Even in separation, clarity and fairness can create space for a better future.
Final thoughts
Section 44 exists to prevent unfair outcomes where property is moved out of reach.
It is a powerful tool, but it is also highly fact-specific. Timing, intention, and what was known at the time all matter.
If trusts are part of your separation — particularly if property was transferred shortly before or during the relationship — early advice can make a real difference.
If you’d like to talk about whether section 44 might apply in your situation, our team is here to help.
Not able to travel to our office? We can meet you online!
Read more articles about Trusts and Separation