Divorce and Trusts

Are trusts protected from divorce?

A trust is a separate legal entity, and its assets are not owned by either spouse.  However, trusts are not ring-fenced from being included in the matrimonial assets considered for division.  

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The court will examine the trust deed in order to seek to ensure a fair division is achieved between spouses.  Sometimes sizeable assets can be held on trust that will inevitably eventually benefit one spouse.  To ignore that would be inequitable.  

It is necessary to examine the nature of the trust.  This is usually done by looking at the trust deed, and the history of how beneficiaries have received from the trust.  

The type of trust will influence how the court can deal with the trust, but the court has wide-ranging powers, including:

  • The power to vary a trust;
  • To transfer trust assets to the other spouse; or
  • To offset an amount that it believes the beneficiary spouse will receive from the trust. 

How Osbornes can help?

When negotiating the financial settlement in a divorce, the first thing to do is to contact us. Our expert divorce lawyers in London have experience in representing and advising clients on complex trust matters. We deal with both UK and overseas trusts.

One of our expert lawyers will take your detailed instructions on the nature of the trust, how it operates, and your individual circumstances. We will discuss your desired outcome before explaining your options, likely timescales, and costs.

If you are overseas or outside London, we have high-speed video conferencing facilities and a full online service to ensure you are kept up to date and fully appraised of your case and legal options.

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Divorce & Trusts FAQs

How are different types of trusts dealt with in a divorce?

Nuptial trusts 

If a trust is ‘nuptial’ then the court can consider it as part of the matrimonial pot that is to be divided between spouses.

While there is no legal definition of a nuptial trust, a court is likely to determine it is ‘nuptial’ if the trust settlement is connected to the marriage and the spouses are beneficiaries. For example, a married couple that set up a trust for the benefit of themselves and their children would be considered a nuptial trust. Depending on the circumstances, it may also be possible to argue that a trust benefiting a business of a spouse (rather than the spouse) would satisfy this test.

Intergenerational trust 

An intergenerational trust is used to benefit the current and future generations of a family and is commonly set up by wealthy families to ensure heritage assets remain within the family. For example, one spouse may benefit from a trust set up by their grandparents.

Courts do not usually interfere with intergenerational trusts when it comes to divorce, which means that the trust will not be considered an asset in the marital pot.

However, it is important to note that sometimes trust monies provided to a beneficiary may have been substantial and contributed towards the lifestyle of the couple. If there are insufficient monies elsewhere to meet one spouse’s needs, then the court may make an order against the trust beneficiary on the assumption the trustees will fulfil that order.

Offshore trust 

If a trust is held offshore, it is important that you speak with one of our specialist international divorce lawyers to help determine if it will be considered in the matrimonial pot or not.

Many foreign jurisdictions, such as Jersey, Isle of Man, Cayman Islands and Bahamas insist that trusts set up in their jurisdiction must be determined in accordance with their laws. This means that any order made by a UK court may not be upheld if it is incompatible with that jurisdiction’s law.

Our lawyers have vast experience in dealing with assets held in foreign jurisdictions, as well as having a network of specialists abroad, so we can advise you on the implications for your divorce if you or your spouse are beneficiaries of an offshore trust and how to enforce an order in the trust jurisdiction,

Sham trust

Sometimes, it may appear that a spouse has set up a trust with the intention of devaluing their assets in order to reduce the size of the matrimonial pot and to reduce the amount that they pay out in a divorce settlement. If this has been done deliberately, this is known as a sham trust.

What is a court’s power for dealing with trusts?

If the trust is a nuptial trust, then the court has a wide range of powers and discretion to deal with the trust and its assets in a financial settlement. In deciding if a trust is a nuptial trust, a court will look at the realities of each case, not just the legalities of what is contained within a trust deed. It will be necessary to examine the trust deed and also:

  • any letter of wishes made by the settlor;
  • when the trust was created;
  • how the trust has previously operated and what distributions from trust assets have been made; and
  • who are the beneficiaries and how have they previously benefited from the trust?

If the court is satisfied that the trust is nuptial, then it can:

  • change the beneficiaries, which allows the court to make provision via the trust to both spouses;
  • change the trustees and appoint new ones, which helps ensure both spouses are treated fairly; or
  • transfer assets out of the trust, to allow the non-beneficiary spouse to receive assets directly as part of their divorce settlement rather than have any continued involvement with the trust.

If a trust is not a nuptial trust the court’s powers will be more limited. It is unlikely that the trust will be taken into account unless the needs of the non-beneficiary spouse cannot be met via other matrimonial assets.

Can a trust be challenged?

A trust can be challenged if you believe it has not been created properly, or it is a sham trust.

Legislation states a number of formalities that are required for a trust to be valid. If these have not been met, then the trust may be deemed invalid, for example, if the settlor has not signed the trust deed.

To challenge a sham trust in court, you would need to prove that this has been set up with the intention of reducing the divorce settlement. It can be difficult to prove that a trust is a sham, and you should speak to a lawyer as soon as you have any suspicions in order you can build the best possible case, and to minimise your costs and save time.

Speak to a Divorce Lawyer Today

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    • Andrew secured me the best financial settlement for my claim. He is a credit to Osbornes Solicitors.

      Family Department Client

    • "Lisa Pepper was recommended to me as non-nonsense and able to help me with a difficult and confrontational divorce. She more than lived up to that – she was practical, collected and always available with a clear opinion and suggestions of how to move forwards. She also was open and helpful about costs and how to mitigate them"

      Legal 500 2021

    • "Mark Freedman is a very capable lawyer, renowned for not being a pushover and pushing his clients’ cases as much as he can, but will always talk sensibly about settlement. He is among the best – tenacious, good judgment and tactically aware."

      Legal 500 2021

    • "Mark Freedman is a dynamic and highly experienced family lawyer who fights extremely hard for his clients and is always in their corner, thus ensuring their loyalty and confidence. In a trial you would always want him on your side."

      Legal 500 2021

    • "She has impressed me as someone who fights my corner but also understands the importance of resolving issues without unnecessary escalation. She is calm and reassuring."

    • "Her mediation practice is exceptional; she is also a great solicitor and has a breadth of skill which is really useful."

      Chambers UK 2021

    • "He is really experienced and wise. He has a lovely manner about him and clients feel safe with him."

      Chambers UK

    • "Jo Wescott is top notch and widely recognised as a rising star throughout the profession. She brings a winning combination of great judgement, an immense work ethic, and a relaxed and charming way with opponents and clients alike. Someone you want on your side”

      Legal 500 2021

    • "Osbornes is pre-eminent for family law in North London. Mark Freedman is a real rainmaker. He is an excellent lawyer and has a top-notch practice"

      Legal 500 2020 - Mark Freedman

    • Mark Freedman is intelligent and personable and has a good selection of high-net work cases.

      Legal 500 2020 - Mark Freedman

    • "Exceptional value for money. Highly competent and reasonably priced. Mark Freedman: one of the best in the field."

      Legal 500 2020 - Mark Freedman

    • "Client-focused. Ready to fight the clients’ corner, but also ready where possible to steer client from unnecessary dispute. Mark Freedman – very experienced, with good instinct for the eventual result. Clients love him and he thinks ahead and directs the client to the best result for the client."

      Legal 500 2020 - Mark Freedman

    • Mark Freedman is a serious player. A fearless family law litigator, who protects his clients’ interests passionately.

      Legal 500 2020 - Mark Freedman

    • Breadth of knowledge and willingness to go the extra mile is what makes it stand out. Mark Freedman – devoted to his clients

      Legal 500 2020 - Mark Freedman

    • Mark Freedman frequently takes on high-value financial and children proceedings that involve complex tax, trust and accounting issues. Sources praise the "tenacity and common sense" he brings to challenging disputes.

      Chambers UK

    • "Mark is very experienced, competent, good with clients and takes a sensible approach to cases. He knows exactly what he's doing."

      Chambers & Partners Directory 2020, Mark Freedman

    • "An exceptional outfit. They take on difficult cases, fight hard and win."

      Chambers UK

    • "The team frequently deals with cross-border estates for high–net-worth individuals."

      The Legal 500

    • "Mark Freedman is a real heavyweight litigator who has dealt with some very significant cases."

      The Legal 500

    • "Mark Freedman boxes clever, keeps his powder dry and when it comes to the end game he negotiates a really good deal."

      The Legal 500

    • "Mark Freedman has a specific focus on high-net-worth divorces and finance cases where there are overseas assets and trusts."

      The Legal 500

    • "Lisa Pepper somehow manages to get parties to settle on matters where there isn’t much hope to start out with."

      The Legal 500

    • "Well-regarded family practice assisting clients with substantial matrimonial disputes and sensitive children proceedings."

      Chambers UK

    • "Mark Freedman draws acclaim for his work in high net worth divorce cases, including those involving company structures, family trusts and overseas assets."

      Chambers UK 2019

    • "He never gives up. He fights for you to the end and has boundless energy."

      Chambers UK

    • Mark Freedman advises high-net-worth clients and knows his stuff.

      Legal 500

    • Highly regarded for his experience as a litigation and mediation expertise, Mark Freedman is tenacious and determined. Clients really feel that he is fighting their corner.

      Chambers UK

    • Andrew handled a very complex, 3 year legal battle for me, with a tremendous amount of patience and professionalism. He is very approachable, always kept me up to date, by phone and e-mail, and responded very quickly to my queries with excellent advice, sound strategic thinking and strong letters to put the other side under pressure. With top contacts for barristers, joint experts and mediation.

      Family Department Client

    • [The Family Law department] handles significant matrimonial finance cases and complex nuptial agreements. Respected for its expertise in cross-border children law matters.

      Chambers UK

    • Mark Freedman represents high net worth clients in complex financial disputes. Sources say that "he's a determined negotiator who'll always do the very best for his clients.

      Chambers UK

    • "Mark Freedman receives a lot of instructions from clients based abroad, often relating to complex divorce proceedings. Sources say: “His main strengths are his enthusiastic passion for the job in hand and his total dedication to his clients.”

      Chambers UK

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    • "Exceptional value for money. Highly competent and reasonably priced. One of the best in the field."

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    • "Mark Freedman is intelligent and personable and has a good selection of high-net work cases".

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    • Andrew secured me the best financial settlement for my claim. He is a credit to Osbornes Solicitors.

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    • "Lisa Pepper was recommended to me as non-nonsense and able to help me with a difficult and confrontational divorce. She more than lived up to that – she was practical, collected and always available with a clear opinion and suggestions of how to move forwards. She also was open and helpful about costs and how to mitigate them"

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    • "Mark Freedman is a very capable lawyer, renowned for not being a pushover and pushing his clients’ cases as much as he can, but will always talk sensibly about settlement. He is among the best – tenacious, good judgment and tactically aware."

      Legal 500 2021

    • "Mark Freedman is a dynamic and highly experienced family lawyer who fights extremely hard for his clients and is always in their corner, thus ensuring their loyalty and confidence. In a trial you would always want him on your side."

      Legal 500 2021

    • "She has impressed me as someone who fights my corner but also understands the importance of resolving issues without unnecessary escalation. She is calm and reassuring."

    • "Her mediation practice is exceptional; she is also a great solicitor and has a breadth of skill which is really useful."

      Chambers UK 2021

    • "He is really experienced and wise. He has a lovely manner about him and clients feel safe with him."

      Chambers UK

    • "Jo Wescott is top notch and widely recognised as a rising star throughout the profession. She brings a winning combination of great judgement, an immense work ethic, and a relaxed and charming way with opponents and clients alike. Someone you want on your side”

      Legal 500 2021

    • "Osbornes is pre-eminent for family law in North London. Mark Freedman is a real rainmaker. He is an excellent lawyer and has a top-notch practice"

      Legal 500 2020 - Mark Freedman

    • Mark Freedman is intelligent and personable and has a good selection of high-net work cases.

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    • "Exceptional value for money. Highly competent and reasonably priced. Mark Freedman: one of the best in the field."

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    • "Client-focused. Ready to fight the clients’ corner, but also ready where possible to steer client from unnecessary dispute. Mark Freedman – very experienced, with good instinct for the eventual result. Clients love him and he thinks ahead and directs the client to the best result for the client."

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    • Mark Freedman is a serious player. A fearless family law litigator, who protects his clients’ interests passionately.

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    • Breadth of knowledge and willingness to go the extra mile is what makes it stand out. Mark Freedman – devoted to his clients

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    • Lisa Pepper is particularly recognised for her role as a mediator in complex cross-border disputes. Her practice also includes handling prenuptial agreements and issues arising from the dissolution of civil partnerships.

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    • Mark Freedman frequently takes on high-value financial and children proceedings that involve complex tax, trust and accounting issues. Sources praise the "tenacity and common sense" he brings to challenging disputes.

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      Chambers & Partners Directory 2020, Mark Freedman

    • "An exceptional outfit. They take on difficult cases, fight hard and win."

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    • "The team frequently deals with cross-border estates for high–net-worth individuals."

      The Legal 500

    • "Mark Freedman is a real heavyweight litigator who has dealt with some very significant cases."

      The Legal 500

    • "Mark Freedman boxes clever, keeps his powder dry and when it comes to the end game he negotiates a really good deal."

      The Legal 500

    • "Mark Freedman has a specific focus on high-net-worth divorces and finance cases where there are overseas assets and trusts."

      The Legal 500

    • "The very personable and client-focused Lisa Pepper."

      The Legal 500

    • "Joanne Wescott is a very approachable and sensible opponent."

      Legal 500 2019

    • "Lisa Pepper somehow manages to get parties to settle on matters where there isn’t much hope to start out with."

      The Legal 500

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      The Legal 500

    • "Well-regarded family practice assisting clients with substantial matrimonial disputes and sensitive children proceedings."

      Chambers UK

    • "Mark Freedman draws acclaim for his work in high net worth divorce cases, including those involving company structures, family trusts and overseas assets."

      Chambers UK 2019

    • "He never gives up. He fights for you to the end and has boundless energy."

      Chambers UK

    • Mark Freedman advises high-net-worth clients and knows his stuff.

      Legal 500

    • Highly regarded for his experience as a litigation and mediation expertise, Mark Freedman is tenacious and determined. Clients really feel that he is fighting their corner.

      Chambers UK

    • Andrew handled a very complex, 3 year legal battle for me, with a tremendous amount of patience and professionalism. He is very approachable, always kept me up to date, by phone and e-mail, and responded very quickly to my queries with excellent advice, sound strategic thinking and strong letters to put the other side under pressure. With top contacts for barristers, joint experts and mediation.

      Family Department Client

    • [The Family Law department] handles significant matrimonial finance cases and complex nuptial agreements. Respected for its expertise in cross-border children law matters.

      Chambers UK

    • Mark Freedman represents high net worth clients in complex financial disputes. Sources say that "he's a determined negotiator who'll always do the very best for his clients.

      Chambers UK

    • "Mark Freedman receives a lot of instructions from clients based abroad, often relating to complex divorce proceedings. Sources say: “His main strengths are his enthusiastic passion for the job in hand and his total dedication to his clients.”

      Chambers UK