Background

In the very recent case of KI v SI [2026] EWFC 73 (B), the Family Court had to determine the true ownership of pieces of farmland within the context of the husband and wife’s divorce.

The wife claimed that she held the farmland on trust for her mother pursuant to a trust deed between them, and therefore the value of the farmland (approx. £1.25m) belonged entirely to her mother. The husband and the wife’s father argued that the farmland was in fact owned by the wife and her father, as set out in an alternative declaration of trust. The wife’s father had contributed to the purchase price of the farmland. The declaration of trust between him and his wife recorded that upon any sale of the farmland, he would be entitled to the sum of £57,500 plus 50% of any further net sale proceeds.  The court was tasked with determining which trust, if any, was genuine.

What did the court decide?

The judge looked closely at the trust documents and the legal advice that the parties to the trust had received. The court also considered the financial contributions of all involved, the reliability of each witness and the credibility of their evidence.

The court found that the trust document between the wife and her mother was a sham and had been created to give a misleading impression about ownership of the farmland. The court found that neither the wife nor her mother intended to create the legal rights and obligations which the trust document purported to create. The wife always regarded herself as the true beneficial owner of the farmland, and her mother never challenged this.

In contrast, the court found that the Declaration of Trust in favour of the wife's father was valid, given the clear understanding of the parties at the time, the provision of purchase monies by the father and contemporaneous conveyancing solicitors' notes evidencing the arrangement.

The court concluded that after repayment to the wife’s father of £57,500, the father had a 40% share in the farmland.  The husband and wife each then held a 30% share in the remainder of the farmland property.

Why does this matter?

Although this case is quite fact-specific, it highlights some important points that affect many separating couples, particularly where trusts are involved, namely:

1. The court looks at the intention, not just the documentation – even if a trust document says someone owns a share of a property, the court will check whether that reflects what was truly intended. If the ownership recorded in the document is contrary to the intention, it may be ignored.
2. Parties cannot use sham trust documents to hide their assets in a divorce – if a trust is set up with the intention of dissipating assets or to avoid sharing assets on divorce, the court is very likely to challenge it.
3. Financial contributions count – If an individual (including a family member or friend) has contributed money towards a property, this could potentially give rise to an interest in the property on their behalf. If the contribution is a gift or a loan, it is important to properly document this so as not to give rise to that interest.
4. Documentary evidence is key – Clear records (such as bank transfers, emails and solicitors’ notes) can make a big difference in proving what was intended.

Trusts in divorce are a notoriously tricky area to navigate; how the court classifies and treats trusts can significantly impact the division of assets between a separating couple. It is important to seek advice as to whether a trust will form part of a financial settlement or whether it can be ringfenced from the divorce proceedings.

If you have questions regarding trusts on divorce or financial remedy proceedings, contact our expert family law solicitors who specialise in realistic and practical legal advice. Call us on 0330 029 8693 or use our online enquiry form to request a call back.