A trust is set up by a settlor and looked after and administered by trustees on behalf of the beneficiaries. It has a separate legal identity. A key feature of a trust is that neither the husband or wife, owns the assets of the trust in the way that they legally own their house, car or savings. Trustees have a duty to look after the interests of the beneficiaries so requests for capital or income may be refused if this unfairly prejudices the interests of the others.
Trusts & divorce
How trust funds are dealt with in divorce depends on the circumstances of the trust and the case. The Court has a wide discretion when deciding what should be considered and in a range of circumstances, the power to vary or rewrite the trust agreement.
Nuptial trusts (nuptial settlements)
A nuptial settlement is when the husband and wife are beneficiaries connected to the trust in their capacity as spouses.
If the Court finds the trust to be nuptial, then it can exercise wide-ranging powers and can make an order to vary the settlement. For example, funds can be paid directly from the trust to a spouse, civil partner and/or any children of the family.
The court has the power to:
Change the trustees and appoint new ones
Transfer monies or property out of the trust
Change who benefits from the trust
Inter-generational or dynastic trusts
This type of trust is set up not only for this generation but for generations yet to come. Often there are clear intentions to preserve the assets of the trust for the family, particularly the bloodline.
If the trust was created before the marriage the Court will look at the history of the trust and why it was established.
In such circumstances the Court may be less willing to make orders that place pressure on the trust unless the needs of the non-beneficiary spouse cannot be met from other assets.The history of distributions out of the trust to the beneficiaries and whether this has taken the form of capital payments or income will be considered.
Trusts held offshore
For those trusts held offshore and therefore based in a different jurisdiction, it is important to understand what the attitude of the courts in the country are before you prepare your case.
It maybe that the courts of those jurisdictions will co-operate with an order made by the English court. In other jurisdictions the Court will not do so, as they are often complying with their own laws to preserve the sanctity of their trusts.
Our International Divorce team are on hand to advise British expats and overseas nationals who currently live in the UK, or have lived in recent years looking to divorce.
How do you challenge a trust?
A beneficiary or potential beneficiary must disclose a trust in divorce proceedings.
If the trust is not found to be nuptial, then the courts powers to procure money from the trust to fund a divorce settlement are limited; creative thinking is required to look at alternative solutions.
An option is to negotiate with the trustees and ask them to assist the parties to meet their financial needs. If they are not willing to help, then it may be possible for the court to place some “judicial encouragement” on the trustees by making orders against the beneficiary party so that the trustees are obliged to help.
How we can help with trusts and divorce
Trusts can be extremely complex with large amounts of money at stake so legal advice at an early stage is very important.
We have experience in cases involving trusts as part of the financial proceedings in the UK and offshore and have helped to protect beneficiaries of a trust or those seeking to include a trust in a financial award.
We advise trustees who are brought into divorce matters how to engage with the English courts because they may wish to co-operate but not subject themselves to the authority of the courts.
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Client: Legal 500
Thank you to Hannah and Nastassia, who were invaluable in getting me through a difficult divorce. I was taken through the process in detail, my questions were answered and every detail was taken into consideration. They made the process as speedy as possible and along with succinct and clear communication, were thorough, fair, transparent and precise. Very much appreciated was the care taken emotionally while remaining appropriately business-like which made an unpleasant situation as painless as possible. Many, many thanks for your excellent work on my behalf.
Client: Mrs S
Jemma is a very experienced, very intuitive and very empathic solicitor. She has worked tirelessly to ensure the very best outcome for me and my children since our first meeting. She is also acutely aware of the emotional impact of what she is dealing with and has shown great patience while being able to progress matters as quickly as possible. She is confident and focused and I completely trust her professional judgement and extensive knowledge of family law. She also understands the complex issues involved in domestic abuse and has listened extremely closely to my story and my wishes. She has ensured the law has fully protected my children and myself during these proceedings. She makes me feel she has a personal investment in my family’s best interests all while maintaining an incredibly professional relationship as solicitor and client.
She has helped me make difficult decisions and kept me strong and focused on the end results and the purpose of our work throughout proceedings.
I would recommend Jemma to anyone dealing with a difficult divorce and needing a “human touch”. I believe this is what makes Jemma stand out from her peers. Her fearless strength and determination to get the best outcome but not losing sight of the need for delicate handling of her clients emotions and trauma when striving for this.
Client: Ms S
Maria Coster has been my solicitor for approximately 2 years. My case has been complex with many emotional ups and downs. Throughout this time Maria has been the voice of objectivity, understanding and compassionate.
She possesses a natural flair for truly understanding her clients' needs, wishes, values and long term objectives. She has been a joy to work with and her professional skills are outstanding..organised, clear and methodical.
Thank you, Maria, for being there through the toughest and challenging time of my life.
Client: Mrs S
Well getting divorced is not exactly a joyous experience, but you are brilliant, so if someone is going through it, of course, I'd recommend you!
May I take this opportunity to show my gratitude and warmest thanks to Claire Chisnall and Sarah-Barr-Young, for providing the children and I with an exceptional service.
Divorce is one of the most emotional, stressful and anxious times. Claire and her team gave me great confidence and reassurance along the entire process.
Claire worked extremely hard to financially protect my children and I with her professional work ethic. I could not think of a more sincere solicitor who goes that extra mile for her clients. She explained every detail in depth giving me the confidence that everything I agreed on was for the benefit of my children.
Overall, I am so happy with the outcome. I can now leave the past behind and focus on a Healthy, Wealthy, Happy life with my new family.
Forever grateful Claire.
Thank you once again to all of the team at Stowe Family Law.
Client: Miss H
Kate Sarsfield represented me through my divorce and I am very grateful for her support, understanding, focus and efficiency throughout the whole process. I felt that she readily made herself available and was very quick to respond to everything, keeping me on track and securing what I believe was the best possible outcome given the circumstances. I would highly recommend her. I would also like to mention how exceptionally pleasant all of the staff were when I had reason to call in.
Client: Mrs M
Helen is very professional, diligent and thorough. She expresses great client care skills & empathy in such difficult times. She showed expert knowledge, strength of will and determination throughout my divorce which resulted in a very satisfactory outcome. For that I am most grateful. I would have no hesitation in recommending Helen in any divorce proceedings with the aid of her support team too.