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Will a trust protect my assets in a divorce?

Will a trust protect my assets in a divorce? It depends on the nature of the trust in question. In line with the duty of full and frank disclosure, you will have to disclose any trust arrangements from which you benefit or which are otherwise relevant to your financial circumstances.

If the trust in question is deemed by the Court to be what is known as a "nuptial settlement", an order can be made against the trustees to vary its terms for the benefit of either spouse or their children. The fact that the trust may have foreign trustees and be governed by foreign law is not, on its own, enough to stop the English Court from making such an order - although enforcement of the English financial order against offshore trustees can present some practical difficulties.

A trust is less likely to be interfered with by the Court if it was established some time before (and not in contemplation of) the marriage, if the family did not benefit from the trust throughout the marriage and/or if any letters of wishes reflect that the trust was not set up in order to fund the lifestyle of the parties during the marriage. It may be, for example, that a dynastic family trust designed to keep wealth within the family from one generation to the next can serve to protect trust assets from your spouse on divorce.   

If all of the family assets are held in my name, does this mean my spouse has no claim on them?

The Family Court has wide redistributive powers on divorce and it will make transfers of property between spouses so as to achieve a division of the family assets that it considers meets the needs of the parties and any minor children. If, for example, the family home is owned solely by the working husband and it is agreed that, following the divorce, the minor children of the family will live with the wife, who is not employed outside of the home, the Court might consider it appropriate, depending on the other circumstances of the case, to order a transfer of that asset to the wife outright. The fact that the property was owned solely by the husband will not preclude this outcome. 

You can find out more about trusts and divorce here.

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Email: bh@boodlehatfield.com

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