Written by: Farzana Naz, Director / Head of Family
Reviewed by: Saracens Solicitors Family Law Team
Trusts and divorce questions arise whenever one spouse is a beneficiary of, or has set up, a trust that holds family wealth, and the central question for the court is not who technically owns the assets in the trust, but how much real access and control that spouse actually has over them. A trust does not automatically place assets beyond the reach of a high net worth divorce settlement, and courts have shown they are willing to look closely at trust structures, particularly where they appear to have been set up or used to shield wealth from a spouse.
Understanding these distinctions early, ideally well before any dispute arises, allows a family to structure or review a trust in a way that offers genuine, lasting protection.
Key Takeaways
- Trust assets are not automatically protected from divorce claims, as courts will look beyond the legal structure to assess the extent of a spouse’s actual access to, benefit from, or control over trust assets.
- The strongest protection is usually found in long-established, independently managed trusts with multiple beneficiaries, whereas trusts that appear closely connected to a marriage or are effectively controlled by one spouse are more likely to face scrutiny.
- Early planning is far more effective than reactive planning, with properly structured trusts, independent trustees and complementary measures such as prenuptial agreements often providing greater long-term protection for family and inherited wealth.
How Trust Structures Work
A trust is a legal arrangement under which assets are held by trustees for the benefit of one or more beneficiaries, according to the terms set out in a trust deed. Trusts are commonly used for succession planning, tax efficiency, and protecting wealth for future generations, and can be discretionary, meaning trustees decide how and when beneficiaries receive anything, or fixed, meaning beneficiaries have a defined entitlement.
In a divorce, the key questions are who set the trust up, who the beneficiaries are, how the trustees have historically exercised their discretion, and whether the trust was established for genuine long term family planning or closer to the divorce with the effect, or intention, of removing assets from the marital pot.
Family Trusts in Divorce Proceedings
Where a spouse is a beneficiary of a family trust set up by parents or grandparents for broader estate planning reasons, courts will usually be cautious about treating trust assets as if they belong to that spouse outright, particularly where other family members are also beneficiaries and the trustees have genuine independent discretion. However, if the trust has a pattern of regularly providing for that spouse, for example by paying school fees, funding a home, or making regular distributions, the court may treat those resources as available to them for the purposes of assessing needs.
This is sometimes described as looking at whether a spouse has a real prospect of receiving further benefit from the trust, even if they have no automatic entitlement to it.
When Trust Assets Come Under Scrutiny
Trusts attract the closest scrutiny where they were set up shortly before separation, where one spouse is both a trustee and a significant beneficiary, giving them effective control, or where trust assets have historically been used to fund the couple’s lifestyle in a way that blurs the line between trust wealth and matrimonial wealth. Courts have the power to look behind a trust structure where there is evidence it is, in substance, a resource available to one spouse, sometimes described as a nuptial settlement, which the court can vary as part of the divorce.
Full and frank disclosure of any trust interest, including historic distributions and correspondence with trustees, is essential, since concealing a trust interest can lead to a settlement being reopened later if it comes to light.
Offshore Trusts and UK Divorce
Trusts set up in offshore jurisdictions raise additional complexity, since the trust deed may be governed by foreign law, and trustees based overseas are not automatically bound by an English court order. English courts will still take an offshore trust into account when assessing a spouse’s true financial resources, and can, in some circumstances, use its powers to encourage or require disclosure and cooperation, but enforcing an order directly against offshore trustees can be considerably harder than dealing with assets held in England.
Where offshore trusts and other international elements are involved, coordinating advice across jurisdictions becomes essential, a topic covered further in International Divorce and Cross Border Assets.
Wealth Protection Considerations
For families using trusts as part of long term wealth planning, the clearest lesson from recent case law is that genuine, well established, properly administered family trusts with independent trustees and multiple beneficiaries are far more resilient to challenge in divorce proceedings than trusts set up shortly before a marriage or separation with one spouse effectively in control. Reviewing trust structures well ahead of any marriage, and considering a prenuptial agreement alongside the trust, offers considerably more protection than relying on the trust structure alone.
For families concerned about protecting broader inherited or family wealth alongside a trust, our guide to Protecting Inherited Wealth on Divorce covers complementary steps worth considering together.
Working With Trustees During a Divorce
Where a spouse is a beneficiary of a trust, trustees are sometimes asked to provide information, or even to give evidence, about how the trust has operated and how they are likely to exercise their discretion in future. Independent trustees are generally best placed to respond to these requests in a way that protects the interests of all beneficiaries, not just the spouse going through the divorce.
Trustees based in England and Wales are, in principle, subject to the jurisdiction of the English courts, while trustees based overseas may cooperate voluntarily even where they cannot be compelled directly, and the approach taken often depends heavily on the trust’s governing law and the trustees’ own professional obligations.
Where a family is setting up a new trust, taking specialist advice on its structure, the identity of trustees, and how discretion should be exercised, before any marriage takes place, gives the arrangement the strongest possible chance of being respected later. Retrofitting protection into an existing trust once a marriage is already under strain is considerably harder and less reliable than planning properly from the outset.
Frequently Asked Questions / Questions & Answers
Can a trust protect assets from divorce?
It can offer meaningful protection, particularly where the trust is genuinely independent, has multiple beneficiaries and was established well before any marriage or separation, but it does not place assets automatically beyond the reach of the court. The strength of this protection depends heavily on how independently the trust has actually been run in practice.
Will the court order money out of a trust?
The court cannot generally order independent trustees to make a payment, but it can take likely future trust benefits into account when assessing a spouse’s resources, and in some cases can vary a trust that is found to be a nuptial settlement. This power is used carefully, and only where there is clear evidence that the arrangement is closely connected to the marriage.
What is a nuptial settlement?
A nuptial settlement is broadly a trust or similar arrangement made in connection with a marriage, which the court has specific power to vary as part of divorce proceedings, even where the assets are held by trustees rather than either spouse directly. Full disclosure at the outset is generally the safest and most cost effective approach.
Do offshore trusts need to be disclosed in a UK divorce?
Yes. Full and frank disclosure of worldwide assets includes any interest in an offshore trust, and failing to disclose one can result in a settlement being reopened if it is later discovered. Cooperation from offshore trustees, while not guaranteed, is often more likely where the trust is well established and professionally administered.
Should I set up a trust before I get married?
It can be an effective part of wealth protection planning, particularly alongside a prenuptial agreement, but trusts work best as part of a considered, properly advised strategy rather than a last minute step. Reviewing existing trust arrangements with a specialist adviser is a sensible first step for many families.
Can a trust protect wealth for children from a previous relationship?
Yes, trusts are commonly used for this purpose, provided they are properly established and administered independently, since a well structured trust can help ensure that wealth intended for children from an earlier relationship remains protected on a parent’s later divorce.
Speak to Our Trusts and Divorce UK Specialists
If a trust forms part of your family’s wealth and you are facing divorce, or planning ahead of marriage, our family team can advise on how it is likely to be treated and how best to protect it.
Call us on +44 (0)20 3588 3500, or visit our Family Law service page to find out more about how Saracens Solicitors can help.
Saracens Solicitors, Thanet House, 231 and 232 Strand, London, WC2R 1DA
