Trusts - both on and offshore - are not automatically protected on divorce. In England and Wales, the family court may consider trust assets when deciding a financial settlement, even though trustees legally own them.

The outcome depends on the trust's terms, history and whether a spouse can realistically benefit from it. The court may also have the power to vary certain trusts.

If you or your spouse has an interest in a trust, JMW's family law team can provide early legal advice on how it may affect your financial position.

Can a trust be included in a divorce settlement?

When trusts are involved, the family court looks beyond ownership. There are two main ways trusts may come into play in divorce proceedings:

• When the trust is treated as a financial resource: The court considers whether a spouse is likely to receive trust income or capital or other support and, if so, make financial orders on that basis.
• When the trust is treated as a nuptial settlement: The court considers whether the settlement has a sufficient connection to the marriage. If so, the court may exercise a statutory power to vary the settlement itself.

How does the court decide whether a trust is a financial resource?

A trust may be regarded as a financial resource if a spouse is likely to benefit now or in the foreseeable future.

Relevant factors include:

• Previous distributions: has the beneficiary regularly received payments or property from the trust?
• Support for family life: have trust funds paid for the family home, school fees or everyday expenditure?
• Trustee independence: do trustees make their own decisions, or does the beneficiary have significant influence?
• Future access: are trustees likely to release funds if the beneficiary requests support?
• The wider beneficiaries: does the trust also provide for children, relatives or other beneficiaries whose interests must be considered?

JMW explains this in more detail in our blog post on how a trust can be a financial resource.

When can the court vary a trust as a nuptial settlement?

A nuptial settlement is one which makes some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children.

Under section 24(1)(c) of the Matrimonial Causes Act 1973, the court has the power to vary a nuptial settlement for the spouses or children of the family. This could change who benefits or how trust assets are applied.

Not every trust is a nuptial trust. The court examines its purpose, terms and connection to the marriage, exercising its power to vary a settlement in light of all the circumstances.

For a closer explanation, read JMW's guide to what a nuptial settlement is.

Can my spouse claim half of my trust in a divorce?

There is no automatic right to half the assets in trust where a beneficiary is divorcing, nor can a beneficiary assume that property held in trust will be ignored.

The court has wide discretion when making financial orders. Under section 25 of the Matrimonial Causes Act 1973, it considers matters including each spouse's resources, earning capacity, housing needs and the standard of living during the marriage. The welfare of any child of the family is the primary consideration.

If one spouse can expect continuing provision from a trust, this may affect how the family home and other non-trust assets are divided. However, it does not automatically entitle the other spouse half of the trust's assets.

Does it matter when a trust was established?

Timing matters, but is not decisive. A trust created by parents before marriage may have a different purpose from one established during a marriage. 

The court may also consider whether property in trust originally intended as separate family wealth has been used to support the couple's lifestyle. If trust assets have paid for the matrimonial home or regular family expenditure, that can affect how the trust is assessed.

Neither a pre-marriage trust nor a trust created during a marriage are automatically safe from attack on divorce. Each case is very fact-specific. 

Can a trust be challenged if assets were transferred to avoid divorce claims?

Potentially. The court can scrutinise transfers intended to frustrate a spouse's financial claims. But a genuine trust is not a sham trust just because it provides asset protection or was created before separation.

A sham involves documents that do not reflect the parties' true intentions. Separately, section 37 of the Matrimonial Causes Act 1973 can allow the court to restrain transactions or set aside dispositions intended to defeat financial relief on divorce.

For more detail, read our blog post on when a trust may be considered a sham.

Do you have to disclose trust interests during divorce proceedings?

Yes. Both parties must provide full and frank disclosure, including trust interests.

Form E expressly asks for trust interests and an explanation of their estimated value and availability. Relevant supporting information may include trust deeds, accounts, letters of wishes and records of past distributions.

Trustees have duties to other beneficiaries, including confidentiality. Nonetheless, the court may require documents or join trustees to family proceedings where appropriate.

JMW also provides specialist advice to trustees involved in divorce proceedings.

What should you do if a trust is involved in your divorce?

Useful steps include:

• Identify the trust and relevant beneficiaries, including any entitlement to income, capital or use of property.
• Gather existing information, such as the trust deed, letters of wishes, accounts and distribution records, where available to you.
• Consider the history of support, including payments towards housing, education or living expenses.
• Obtain specialist advice early, including advice on disclosure obligations and appropriate communication with trustees.

Do not conceal interests or transfer assets to frustrate claims. For forward planning, see JMW's advice on trusts and asset protection on divorce.

How JMW can help with trusts and divorce

At JMW, we advise spouses, beneficiaries and trustees on divorce cases involving company shares, investments, property and international assets. We combine family law expertise with knowledge of trust governance and family wealth.

Our work includes:

• Assessing whether a trust is likely to be treated as a financial resource or a nuptial settlement.
• Advising on financial disclosure, trustee engagement and the evidence needed to establish the trust's position.
• Responding to arguments about sham arrangements, asset transfers and financial claims.
• Developing a strategy for negotiation, financial remedy proceedings or cross-border trust issues.

Our UHNW advisory work is led by Ruben Sinha. Through JMW Signature, we work with our private wealth and private wealth disputes teams and in-house advocacy specialists where needed.