Our divorce and trusts solicitors can help with:
- Establishing whether a trust is considered a marital asset
- Varying the terms of a trust
- Dissolving trusts to facilitate a divorce settlement
- Family trusts in divorce
- Determining whether a trust is genuine or a ‘sham’ trust
We can also advise on all other aspects of divorce and separation including financial arrangements on divorce.
Why choose Brethertons for help with trusts and divorce?
- Our expertise is independently recognised with Band 1 ranking in Family/Matrimonial Law by Chambers & Partners and Tier 1 ranking for Family Law from the Legal 500
- We are accredited by the Law Society for Family Law and Family Law Advanced
- Our team has strong experience dealing with trusts during divorce, so can provide tried-and-tested expertise for these situations
- We can help clients across England and Wales over the phone, via email and videoconferencing, as well as face-to-face where appropriate
- Our advice is straightforward and jargon-free to give clients confidence that they fully understand their rights and options
Trusts and divorce FAQs
How do trusts work in a divorce?
How trusts work in divorce can be very complicated, especially where one of the spouses is a beneficiary of a trust that also has other beneficiaries. Legally, any assets that are available to a person must be disclosed if they are getting divorced, including trust assets. These assets can then, potentially, be factored into any negotiated or court ordered financial settlement.
Trust assets may need to be transferred to the non-beneficiary spouse as part of a divorce settlement or it may be necessary to dissolve the trust so its assets can be divided.
Does a trust protect assets from divorce in the UK?
Putting assets in a trust cannot be used to protect them in divorce. Courts are very hot on the issue of whether a trust is genuine or whether it is a ‘sham trust’ i.e. one that has been set up to protect assets for illegitimate reasons. Setting up a trust solely for the purposes of trying to protect assets from your spouse in divorce is not legitimate and such a trust for divorce protection would almost certainly be treated as a sham trust by a court.
If you wish to protect assets in a divorce, you should seek out expert advice as there can be legitimate alternatives to using trusts to protect assets.
Are trusts marital assets?
In divorce, assets can either be considered marital assets or sole assets. Marital assets are those that need to be considered as part of any division of finances. Whether something, such as a trust, is considered a marital asset is not always simple, so you should seek expert advice on this as soon as possible.
How can you protect inheritance from your spouse in divorce?
Inheritances can be a very emotive subject in divorce as people often feel that their spouse has no right to benefit from those assets as they were not intended for them.
The reality is that inheritances can be treated as marital assets, even if they are placed in a trust, but exactly how this applies will depend on the circumstances. For this reason, it is essential to get expert legal advice if you have received an inheritance or are anticipating receiving one in the near future.
One legitimate option to protect an inheritance during divorce would be to negotiate a settlement with your spouse that means you keep the inherited assets. Depending on the situation, your spouse may be perfectly happy to accept this, although you might need to give up a greater share of other assets in exchange.
Do I have to disclose my new partner’s assets?
If you are cohabiting with a new partner before your divorce settlement has been finalised, then you will likely need to disclose their assets, including any held in trusts. In particular, any financial support you are receiving from your new partner will need to be considered when determining what is a fair division of your existing assets.
The reason your new partner’s assets may be relevant is because this may have an impact on your own ‘reasonable needs’ and therefore what you may be entitled to in a settlement.
If your former spouse had significantly higher income and/or assets than you, then you might be anticipating receiving a share of their assets or ongoing spousal maintenance as part of your divorce settlement. However, a court would look at various factors, including your ‘reasonable needs’ when deciding what a fair division of assets is.
If you are receiving or theoretically have access to financial support from a new partner, this could be considered to be partially or wholly meeting your reasonable needs, reducing the amount you might be entitled to in a settlement from your former spouse.
What happens to a family trust in the event of divorce?
Assets contained in a family trust may potentially be treated as part of your marital assets for the purposes of the division of finances. This often comes as a surprise to people, many of whom assume that these family assets are protected from divorce.
The simple fact is that, if one of the people getting divorced is receiving any financial benefit from a family trust, the benefit they receive could be considered part of their assets and thus ‘fair game’ for a divorce settlement.
What this means is that, if a court is required to decide the division of assets, it could require some of the assets or income from a family trust to be paid to the spouse who was not a beneficiary of the trust. While these matters can often be resolved privately without involving a court, it is important to think about what a court would do in order to make sure any agreement reached is fair and reasonable.
Factors a court would consider when deciding whether the assets or income of a family trust need to be transferred to the non-benefiting spouse in divorce include:
- Whether those assets are needed to meet their reasonable needs
- The length of the marriage
- What contribution each spouse made to the marriage (including non-financial contributions)
Can I put my house into a trust to avoid losing it in divorce?
The short answer is no, you cannot use a trust to ringfence your house so that it does not have to be considered as part of your divorce settlement.
If you are looking for legitimate means of protecting assets in a divorce, such as your house, your best approach is likely to be to negotiate a settlement with your spouse that allows you to keep the house. Be warned, however, that you may need to give up a greater share of other assets in order to reach an agreement on this.
If the house is in your sole name and you owned it before your marriage, it is possible that it would not be considered a marital asset and therefore your spouse would not be entitled to a share of the property. This is not always straightforward to determine, however, so expert advice should always be sought on this at an early stage of proceedings.
It is important to state that you must not attempt to hide or dispose of assets to avoid their inclusion in your divorce settlement. This could have serious legal consequences and might result in you ending up in a worse financial position than could have been achieved otherwise.
Consult our divorce and trusts solicitors in Banbury, Bicester and Rugby
To speak to our experts today, please don’t hesitate to get in touch.
We have offices in Banbury, Bicester and Rugby, working with clients across Coventry and Warwickshire, the West Midlands, Oxfordshire and nationwide.
