Legal News | 2.10.25

How does the Family Court treat trusts on divorce?

What is a trust? 

A trust is a legal arrangement whereby one or more ‘trustees’ hold assets for the benefit of one or more ‘beneficiaries’ who are or may become entitled to receive some benefit from these assets. There are a range of different types of trusts, each with distinct powers to the ‘trustees’ and subject to specific tax regimes.

How are trusts treated in divorce? 

A trust is primarily a mechanism for succession planning and wealth protection for future generations. However, there is a common misconception that trust assets are effectively ‘ring-fenced’ in a divorce settlement and cannot be taken into account by the Family Court when ensuring fairness and reasonable needs are met.

The Family Court ultimately has extensive powers, and will treat the trust assets in two main ways by either:

• Option 1: determining the trust assets as a financial resource of one or both spouses, or
• Option 2: less commonly, determining that the trust is a nuptial settlement.

The factors the Family Court considers when determining if a trust’s assets are a financial recourse to a spouse (under Option 1 above) can include the following:

• the nature and purpose of the trust;
• whether the spouse is a beneficiary under the trust;
• the history of distributions;
• the overall value of the trust and liquidity;
• the impact on other beneficiaries; and
• the relationship between the spouse beneficiary and the trustees.

How can Wansbroughs help? 

It is always advisable to have the trust deed and any letter of wishes carefully drafted by a professional. Our Private Client Team at wealth@wansbroughs.com can therefore help with the drafting of such documents.

Our Private Client Team also works closely with our Family and Divorce Team at family@wansbroughs.com.

As The Family Court’s treatment of trusts on divorce is fact-dependent, we would therefore recommend seeking advice from our Family and Divorce Team at an early stage, including the option of a nuptial agreement. This is a document that can be signed not only before marriage but also after marriage and determines how assets should be divided in the event of a divorce (including excluding non-matrimonial trust assets).