If you are going through a divorce and either you or your spouse are the beneficiary of a trust or have put funds into a trust, you may be wondering how these trust assets and income will be dealt with.
Although money from a trust is often thought to be protected and out of reach of the courts, this is not necessarily the case. You will both need to disclose the extent of any assets held in trust and the court may take these into account when making a financial order on divorce.
Dealing with trust assets in divorce can be complicated and you are strongly advised to speak to a family law solicitor with expertise in divorce and trusts UK law.
At Huggins Lewis Foskett in South Woodford, our family law team can advise you on the way in which finances will be split on divorce and provide robust representation. We know how important it is that you achieve financial security for the future and we will work to secure the best possible outcome for you and your family.
If you would like to talk to our divorce and trusts solicitors in London, ring us on 0208 989 3000. Or use our simple contact form to request a call back and we will be happy to answer your questions.
Why choose Huggins Lewis Foskett for divorce and trusts advice?
Our divorce and trusts solicitors in South Woodford, London provide expert advice and guidance to clients dealing with financial matters after a separation. Our experience in dealing with the complex area of trusts in divorce means that we can protect your rights and interests and ensure that you have the legal support you need at this difficult time.
We are members of Resolution, the family law group committed to dealing with divorce with minimum conflict. We are often able to resolve matters out of court by way of negotiation or through alternative dispute resolution. This is generally quicker than litigation as well as being more cost-effective and less damaging to relationships.
Our divorce and trusts service
Disclosure of trusts in divorce proceedings
When dealing with financial and trust issues on divorce, both parties must make full financial disclosure. We will assist you in completing your disclosure information and take steps to ensure your spouse also makes full disclosure.
Negotiations relating to trusts and financial settlement
We can enter into negotiations on your behalf to try and reach an agreement over the division of assets on divorce. Where these are successful, we will draft a financial consent order to be approved by the court. This will then be sealed into a binding order.
Alternative dispute resolution
Where negotiations are not successful, we can represent you in alternative dispute resolution to attempt to reach an out of court settlement.
If an agreement cannot be reached, we will prepare a strong case for court on your behalf and ensure you are represented by an advocate with expertise in financial settlements and trusts.
Enforcing divorce financial orders
Once you have secured a financial order on divorce, we can deal with enforcement of the terms of the order where necessary.
Everything you need to know about divorce and trusts
What is a trust?
A trust is a legal structure for holding and managing assets for the benefit of someone else. Trustees control and invest the funds to provide money or property for the trust’s beneficiaries.
A trust is generally set up either by a trust deed or by a Will and this document governs how the trustees manage and distribute the funds.
There are several different types of trust, including discretionary trusts where the trustees can exercise their discretion in giving money to the beneficiaries.
How can I protect my assets in a divorce?
If you are going through a divorce, you need to have a financial order made, setting out how your assets will be shared. Without an order, your former spouse could make a claim against you in the future, long after your divorce has been finalised. Only a court order will end your financial commitment to each other.
A divorce solicitor will be able to provide advice on protecting your assets, taking into account your situation and which assets are most important to you. Generally speaking, all assets owned by both parties are considered matrimonial assets and may be shared on divorce.
The starting point of the court is to divide everything 50:50, although other issues will be taken into account, including:
- Income, earning capacity and other financial resources that are available to each of you, both now and in the foreseeable future
- Your financial needs, obligations and responsibilities
- The standard of living enjoyed during the marriage
- Your ages and the duration of the marriage
- Any physical or mental disabilities
- The contributions each of you have made to the family, including childcare and looking after the home
- Conduct, where it would be inequitable to disregard this
If a trust has been set up, then this may offer a level of protection. However, the court has the power to vary a trust in certain circumstances.
If you are setting up a trust to try to protect your assets, you are strongly advised to take legal advice before doing so.
Are trusts protected from divorce?
Assets in trusts are not always protected from divorce, in particular where a trust is a nuptial trust. This is a trust that provides for one or both of you and that has specific reference to your marriage.
If a trust is felt to be a sham, and the person who has set up the trust retains an element of control, the court may consider that the trust assets belong to that individual and take them into account when making a financial order.
Similarly, if the court decides that a trust is a financial resource available to one of you, then it can include this when deciding how much to award.
Is a trust a nuptial trust or a non-marital trust?
A nuptial trust can be entered into before marriage or during a marriage, but will be set up in light of the marriage. If the court believes that a trust is a nuptial trust settlement for the benefit of one or both of the parties, it has the power to vary the terms of the trust and transfer assets out of the trust and award them to one of the parties.
If a trust is a non-marital trust, then the court will not vary it. This means that the question of whether a trust is a nuptial trust or a non-marital trust can be crucial during divorce proceedings.
In deciding whether a trust is nuptial, the court will look for wording that refers to the husband, wife or marriage or that deals with assets in the light of the marriage.
What financial settlement orders can a court make over a trust?
If a trust is found to be a nuptial trust, then the court can make an order requiring the trust to pay assets to one of the parties. In addition, it can add or exclude beneficiaries to the trust, replace trustees and otherwise change the terms of the trust.
If the court decides that a trust is a financial resource available to one of the parties, then it will take those assets or income into account when dividing the matrimonial assets. This means that the person benefiting from the trust will receive less of the other available assets.
What happens if a trust is off-shore?
Off-shore trusts can be harder to examine, but the courts will still try to establish the situation and act accordingly. Money and other assets held off-shore can be considered as part of the matrimonial assets. There may be challenges in dealing with issues such as disclosure, valuation and foreign legal jurisdictions, however holding money in an off-shore trust does not mean that it is taken out of consideration in divorce.
Our divorce and trust fees
Fixed fee divorce and trusts advice
We carry out some work in respect of divorce and trusts on a fixed fee basis so that you will know from the start how much the cost will be.
Hourly rates for divorce and trusts legal advice
For more complex matters, such as negotiating a financial settlement on your behalf, we charge on an hourly rate basis. The level of charge will depend on the complexity of your case and the legal expertise required.
For an estimate of our costs, please ring us and we can book you in for a free consultation of up to 30 minutes.
Our family law team
For more information in respect of our services, see our divorce financial settlements solicitors page.
Speak to our divorce and trusts solicitors London, South Woodford
If you would like to talk to our divorce and trusts London solicitors in South Woodford, ring us on 0208 989 3000. Or use our simple contact form to request a call back and we will be happy to answer your questions.