Assets not ‘owned’ by a person, such as assets held in trust, can sometimes be looked on as part of the wealth of a person when making a financial settlement on divorce.
In a recent decision, a woman won a £4.5 million divorce settlement, which included £1.5 million from a trust fund that her former husband had sought to exclude from the calculation.
The couple were married in 2001 and separated in 2007. They had two children, aged six and two at the time of the hearing. The husband’s resources were assessed at around £6 million without the trust fund. He proposed a settlement of £3 million. His ex-wife, however, wanted to aggregate the husband’s assets with resources from two trust funds having an approximate value of £14.5 million. She claimed an award amounting to £6.5 million.
Evidence on the details of the trusts was in short supply, as the Jersey company acting as trustee to the funds did not supply much information when ordered by the court. The husband stated that he had set up the trust funds with assets from his father, on behalf of his parents, sister and the family’s charitable foundation. He claimed that his interest in the funds was subordinate to the other beneficiaries. The wife, on the other hand, claimed that the funds were in reality assets readily available to the husband.
Under the Matrimonial Causes Act 1973, when a settlement on divorce is made, a court is required to take into account all the resources available to each party. The judge was therefore required to consider the extent to which the trust funds represented resources available to the husband. Precedent suggested that the court should not be ‘misled by appearances’ and should ‘look at the reality of the situation’.
In considering the matter, the judge relied on the question of whether, if the husband were to request an advance from the trust, the trustee would be likely to give it to him. This question was answered in the affirmative and the judge further concluded that, in funding an award to the wife, the interests of the other beneficiaries of the trust would not be appreciably damaged.
The husband was therefore ordered to pay £4.5 million to the wife, plus a substantial contribution to her costs.
“This case clearly shows that assets cannot be ring-fenced simply by putting them in a trust fund,” says <<CONTACT DETAILS>>.
Partner Note
B v B [2010] EWHC 3422. See