How are trusts treated in the divorce process?
When considering the division of assets and financial claims on divorce, the court looks at all the circumstances of the case, including “…the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future…” This can include trusts.
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In certain circumstances, the court has the power to vary the terms of a trust to make financial provision for one of the married couple or for the children of the family. To do this, the court must be satisfied that the trust is a ‘nuptial settlement’ – either ante-nuptial or post-nuptial.
The question of whether a trust is a nuptial settlement is often extremely complicated. Broadly speaking, a trust is a nuptial trust if its existence is for the benefit of one or both of the married couple and if it was created because of, or with reference to, the marriage. The application of this definition can be complex in practice, particularly when a trust has a long history.
Even if the court takes the view that a trust is not a nuptial one, it can still take the existence and value of the trust into account when allocating the matrimonial pot. In this way, an adjustment can be made to the non-trust assets to reflect the fact that the assets within the trust cannot be altered. This is known as ‘offsetting’.
The treatment of trusts can be a major factor in cases with significant trust assets at stake. Our team of highly experienced family law solicitors in Chester and Shrewsbury can offer advice on all aspects of trusts, be it the creation of trusts, protecting pre-acquired or inherited wealth through pre-nuptial agreements or advising you at the point of marital breakdown. We can also advise you if you’re a trustee who has been joined in the divorce proceedings or served with a list of questions to help with the divorce process.
An integrated team that will support and advise you
In addition, for more complex trust issues, we can call on the substantial expertise of our Wills, Trusts and Tax team for further specialist advice.
Key Contacts
Simon Magner Mawdsley
Partner | Head of Family Law
Described by clients as "an excellent listener, open and engaging", "exceptional", "reassuring" and "insightful", Simon acts for a range of clients in all aspects of relationship breakdowns including divorce, resolution of financial matters, civil partnerships, cohabitation disputes, pre- and post-marital agreements, injunctions, and children matters.
