Trusts

Trusts are common in England and Wales as well as all countries world-wide that derive their law from England and Wales. Divorce settlements frequently involve them.

It is said that trusts began at the time of the crusades. Landowners departing from England would entrust their property to a custodian for the benefit of their family. Detailed laws arose setting out the obligations of the custodian – the “trustee,” that is, the person in whose trust you placed the property.

Over the centuries it was used as a means of ensuring that an estate could not be frittered away by irresponsible descendants, and in more modern times it became a valuable device to avoid repeated inheritance tax imposts landing on each successive generation, and often to shelter income from tax.

The English divorce courts look at the underlying reality as well as carefully studying the documentation. For example if the reality is that the trust does hold family wealth perhaps stretching back for half a century or more, that may lead a Court to decide that on-going maintenance orders are a better solution that trying to force a termination of the trust. In other cases though (see the case of Prest v. Petrodel as a modern example) the trust is just used as the founder’s piggy bank and the Courts can be robust in their approach.

Henry Brookman has long experience of trusts both in establishing them in the course of estate planning and dealing with them in divorce settlements.

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