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The Family Court's expectations of Trustees

In RK v RK, [2012] 3 FCR 44 the Court had to consider whether to make an order against the husband for a lump sum payment to the wife, which he could only meet if the trustees assisted him to do so.

The family assets principally comprised a number of discretionary trusts, settled by the husband's predecessors, of which the husband, children and wife were beneficiaries. The main asset of the trusts were shares in a family farming company. The parties - who had been married for eight years and had three children together - relied substantially on the farming company, which also provided them with housing.

The trustees offered to provide £400,000 for the wife, of which £375,000 was for the purchase of a property, to be provided under a protective life interest trust. The wife sought additional provision from the husband, at a level that he would only be able to meet if the trustees were to make additional resources available to him from the trusts.

The trustees, mindful of the interests of the other beneficiaries made it clear that they were not currently minded to make provision beyond the £400,000 but that they would reconsider the position in the light of the Court's judgment. The judge held that resources held within a bona fide discretionary trust are a party's resource, to the extent which, on the balance of probabilities they are "likely" to be made available to that party, either now or  within the foreseeable future. The Judge commented that the court will expect trustees to respond positively if it concludes that the interests of the trust and of the other beneficiaries would not be appreciably damaged were the trustees to provide the husband with the resources to enable him to make proper financial provision for his wife and children.

 Since any house purchased for the wife would remain within the trust structure; the Judge considered that the trustees could increase the housing fund to £425,000.  The more difficult question was whether he should make any lump sum order against the husband to enable the wife to meet her other debts. He concluded that he was satisfied that the trustees would not provide the £245,000 sought by the wife and that it was reasonable for them not to make such a provision and that looking at the landscape, as he would expect the trustees to look at it, he considered it likely that the trustees would provide the wife direct and/or provide the husband with resources to enable him to pay her a lump sum of £50,000. That would provide the wife with a reasonable sum in respect of her liabilities that would not appreciably damage the interests of the trusts or of the other beneficiaries.  

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