Dear All
Kindly advise what would be the best trust for someone who has a property portfolio and would want to protect his interest in the event of any divorce so that the properties would not form part of financial proceedings.
Any advice would be great
Awais Mahmood
I’ll approach this from the viewpoint of advising the spouse seeking a financial remedy in divorce. The skills required here are in both trust law and family law. Because of the plethora of litigation of this kind between spouses there is a hugely important body of case law with significant decisions on every aspect. I presume that the spouse with the property portfolio is trying to have his cake and eat it so that he will be treated for IHT as making a GROB and that he will not try to act fraudulently by attempting to create a non-GROB with stooge beneficiaries who are him in disguise.
Here is the list of attack weapons:
1 the trust is a sham or otherwise technically invalid (Mostyn J has described this as a “cipher” or “Dear me” trust);
2 the transfer to it should be set aside under s37 MCA 1973
3 the trust is a “financial resource” so that although no order can be made directly against the trustees the court can make a greater value order against the spouse in the expectation that the the trustees will be “judicially encouraged” to distribute funds to the discretionary spouse-beneficiary. (if they have a fixed interest that is an actual resource).
4 the court has very powers to vary a “nuptial” settlement under s24(1)(c)
5 Costs order where there has been “litigation misconduct”
Apart from all that it’s a great idea!
Jack Harper
Virtually an impossible task. Trust property is basically fair game and trust property may (probably will) be treated as part of the overall financial resources the couple. The family law principles on divorce may not align with property/trust law principles. Overseas trusts are just as much fair game as those of the UK.
As Jack indicates, the courts are littered with decisions on warring spouses any of which are worth a read.
Malcolm Finney
Jack I’ve gone through a number of responses to questions this morning from emails saved over the last few months. I have laughed so much. It’s totally made my morning