How Are Offshore Trusts Treated In Divorce Settlements?

Date: December 16th, 2011 - Written by: Brookman Solicitors

Henry Brookman provides the answer to a Financial Times’ ‘Wealth Question’ regarding how a offshore trust may be treated as part of a divorce settlement.

Financial Times Wealth Question:

“I live in the UK most of the year but I have a property in the Caribbean and the bulk of my finances are tied up as shares in a Caribbean trust.  I am separated from my wife and wish to start divorce proceedings.  However, I would like to keep my Caribbean assets separate from those I hold with my wife in the UK.  Will the courts in England include my Caribbean assets in any settlement?”

Henry Brookman Responds:

It is unlikely the English courts will allow you to ‘ringfence’ the trust assets outside of your UK estate.  The courts are less likely to consider the structure of a person’s assets than the underlying reality of the financial situation.

Much will depend on whether your trustees are truly independent (for instance, if the trust was set up by your parents and included other family members) or whether the trust is in fact directed by you.

Whilst you say that you live in the UK for most of the year, it may be beneficial to spend more time in the Caribbean and then initiate divorce from there.  The courts there are more likely to allow you to separate your trust assets from any settlement.

Your situation would require careful consideration with your solicitor as there remains a risk that your wife could simply seek all your UK assets if you were to keep your Caribbean trust.  Additionally, there is a risk that even if your divorce was conducted in the Caribbean, your wife could still bring a financial claim, although she might struggle to establish her case.

If you would like to know more about this issue please contact Brookman Solicitors for more information.

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