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A Matter of Trust – Non Nuptial Trusts

Posted on Tuesday, 25th June 2013 by
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This Blog follows on from my earlier one about Trust Assets to deal specifically with the situation whereby only one member of a married couple is the Beneficiary of a discretionary Trust that his or her wider family have set up, and the other isn’t.

 

These so called “non nuptial Trusts” cause their own problems.  This is particularly where historically, as is so often the case, the Trust may have advanced monies from the Trust for, for example, to buy the couples  matrimonial home, holiday homes, day to day living expenses, etc., all in accordance with the terms of the Trust but where the discretionary Trustees are entitled to and indeed do “pull the plug” if the husband and wife separate.  The particular problem is where the spouse who is not a beneficiary of the Trust suddenly  finds a massive drop in their living standard but knows full well that the other spouse, who is a Trust beneficiary , will carry on being looked after possibly in a very royal fashion indeed.

 

The English Courts have not been slow in finding ways to persuade the Trustees to make proper provision on divorce to provide continuity of living standard .This “persuasion” can  extend to requiring the Trustees directly to benefit the non-trust spouse via the provision of housing or on-going maintenance. In one case there was some doubt about whether the trustees would pay anything to the non-beneficiary spouse so the court gave them 90% of the non-trust assets in the hope that the trustees would provide for their own beneficiary out of the trust . The court will have strong regard for how the trust has been operated historically (amongst other factors ) in deciding what provision might be reasonable .

 

The Trustees can be required by the Court to make realistic assessments, to balance the rights  and expectations of  other Beneficiaries under the Trust with the expectations of the divorcing couple .Generally speaking  Trustees who refuse to take part in the matrimonial proceedings might find themselves  on the receiving end of some very robust orders indeed and it is therefore important not only  for all the Beneficiaries under the Trust and also the Trustees themselves to take advice on family law, if one of their Beneficiaries is going through the divorce process.

Faye Remnant is part of our Family Law team based in Loughborough; our Solicitors in Loughborough are experts in their fields and dedicated to quality client care. If you would like to find out more about our solicitors in Loughborough please contact us.

 

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