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Trusts in divorce

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In ancillary relief proceedings considering the treatment of trust assets the Court of Appeal has demonstrated a willingness to treat a family trust as a resource of one of the parties to the divorce. The husband and wife had been married for over 20 years and four children. They separated in 2008 and began divorce proceedings for a financial settlement. The main dispute fell over the value of the assets available for division. At the hearing the parties presented considerably differing valuations as to the assets available, the husband claiming that the assets amounted to £3 million whilst the wife valued the assets at near £12 million. The main reason for the difference was their treatment of certain assets in trust in which the husband had an interest. There were two trust assets being contended, both inherited from the husband's side of the family. The husband's father had created the first trust, under which the husband was a beneficiary, and the trustees of the first trust then created a second trust to move assets for tax reasons. Importantly the husband was not a beneficiary of the second trust, nevertheless the judge decided that the value of both trust assets should be included and valued the total resources available to the parties at £10.4 million, £7 million of which being the assets of the two trust funds. This led to the wife being awarded a lump sum of nearly £3 million, an award that the husband then contested. The husband's appeal was dismissed and the original award upheld. It was held that the judge had no alternative but to find that the trust assets were a resource which should be taken into account in the division of assets. It was found that the husband had sought to conceal the truth behind the trust asset and incorrectly presented to the court the way that the trust was held. It was clear from the facts of the case that the trustees were prepared to do the husbands bidding and could be expected to immediately release funds at a future date upon the husband's request. It was therefore considered appropriate to take into consideration the trust assets in accordance with section 25(2)(a) of the Matrimonial Causes Act 1973, requiring the courts to consider all financial assets the parties have or might have in the foreseeable future. It was acknowledged by the court that the wealth had been brought into the marriage by the husband, but it was accepted that the weight to be given to non-matrimonial property in individual cases was a matter of discretion for the trial judge and in this case it was appropriate for them to be included. There is nothing particularly surprising about the outcome of this case, as it demonstrates the proper division of family assets in a financial settlement. In this case the specific facts of the case meant that the court found it appropriate to treat trust assets as a resource of one of the parties, especially as it was clearly evident that the husband and the trustees had attempted to mislead the court as to the power that he influenced over the trust property. Gepp & Sons have a team of highly skilled solicitors' specialising in all areas of family law. To arrange a free initial consultation about your family law concerns, please contact Gepp & Sons Family Law Department on 01245 228106 or e-mail paynes@gepp.co.uk. The above is not legal advice; it is intended to provide information of general interest about current legal issues.