An analysis of the risks that arise for discretionary trust settlements in the event of a divorce: to what extent does the Family Court’s asset division approach undermine discretionary trusts?

Abstract

Abstract Following the House of Lords’ decision in White v White, the concept of ‘equality’ has made asset computation and division following divorce, particularly in ‘big-money’ cases, more extensive. This article examines whether discretionary trusts are vulnerable to interference by the Family Court during ancillary relief proceedings through considering three approaches. First, by varying the trust settlement under section 24(1)(c) of the Matrimonial Causes Act 1973 (‘MCA’). Second, through the ‘resource’ approach under section 25(2)(a) MCA. Third, by relying on the sham doctrine. It accordingly identifies practical considerations for trustees and settlors to ensure that their trust assets remain intact following divorce proceedings.