Trusts on Divorce

Trusts on Divorce

What happens to trusts on divorce?

Clare Curran, Partner in charge of the Family Law Department at Worthingtons Solicitors based in both Belfast and Newtownards looks at the manner in which trusts can be dealt with upon a marriage breakdown here in Northern Ireland.

There are a number of different types of trust and how they are considered as part of a marriage breakdown and a subsequent divorce settlement can vary widely.  Here at Worthingtons Solicitors we have experienced family law practitioners who are well versed in advising what may happen to an asset held on trust in a matrimonial breakdown.

A trust may have been set up primarily as a tax efficient way to pass assets down through one generation to another.  If you or your partner has a beneficial interest in a trust it is a financial resource which may be available to you and therefore its existence should be disclosed as part of the exchange of information required when negotiating a financial settlement.  However, simply because it has to be disclosed, does not necessarily mean that the trust itself will be treated in the same way as other assets to the marriage, however, failure to disclose the existence of a trust could have damaging consequences for the non disclosing party.

It is important to find out as much as possible about the trust at the outset as the court’s powers in dealing with the trust may in actual fact be very limited, depending on the type of trust that exists.  If, for example, the benefit of the trust is not immediately available, or if no distributions have been made by way of income or capital payments, then the existence of the trust may have little significance in terms of the overall financial settlement.  However, if a spouse has derived an income from the trust or has benefited from capital payments from same, then the courts are much more likely to view this as an ongoing financial resource for the future and therefore one which it would be unfair to disregard in terms of implementing a financial settlement.

If the trust is ‘nuptial’ ie one that has been made with reference to the marriage, then the court will have wider powers as to how to deal with it.  For example, it can change the trustees, transfer money out of the trust and change who benefits from it.

Once the nature and value of the trust has been established, consideration should be given to the impact this will have on the overall financial settlement.  Here at Worthingtons Solicitors we have specialist solicitors who deal with all legal issues arising from a marriage or relationship breakdown.  Getting the right advice at the outset should assist you in resolving your issues constructively, if both parties are willing, without incurring huge legal costs and avoiding difficult and costly litigation.

Clare Curran is a specialist family law advisor and can be contacted on or telephone 028 91811538.



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