Protecting Trust Funds on Divorce

Eva Moynihan recently spoke to Grace Lawrence of FLiP for an article for Tatler Address Book, discussing the impact of divorce on the management of trusts.

The English court has long had a reputation as one of the most generous divorce jurisdictions in terms of the awards made for the financially weaker spouse. Judges have very wide powers to redistribute assets between a divorcing couple to ensure that after separation they can each meet their needs going forward. Many people don’t realise that those powers can extend to varying the terms of a trust of which one spouse is a beneficiary. At the very least, the court can take account of the trust fund when assessing the available resources. That can be a scary prospect for families who have sought to use trust structures to protect their wealth and to ensure it will only pass on to future generations of their bloodline.

Trusts are vulnerable to attack on divorce in two main ways:

1. As a Nuptial Settlement

2. As a Resource…

…Eva Moynihan, Senior Associate at Edwin Coe, who advises high net worth families on their estate and succession planning comments: ‘Trusts are often a highly effective succession planning tool, but it is crucial to identify certain risks at the outset and that includes the risk of beneficiaries divorcing. One must assume that the trust documents and any letter of wishes will one day be seen by the family courts‘…

You can read the full article on Tatler’s website.