Itโs not unusual for couples to ask me whether putting assets into a trust will protect them if the marriage ends. Often itโs the family home โ sometimes placed in a trust to safeguard it from being sold to pay care fees later in life. But the real question is: are trusts protected from divorce in the UK?
The short answer is: not always.
What is a trust?
A trust is a legal arrangement where assets โ such as money, property, or investments โ are managed by trustees for the benefit of certain people (the beneficiaries). Once an asset goes into a trust, it no longer belongs to the person who set it up in their own name. Instead, the trustees look after it and follow the rules set out in the trust deed.
People often use trusts to:
- Protect family wealth for future generations.
- Pass on assets in a controlled way.
- Safeguard property, such as the family home, from being sold to pay care costs later in life.
How trusts are treated in divorce
A trust is a separate legal entity, so technically the assets inside donโt belong to either spouse. That doesnโt mean theyโre ring-fenced from divorce, though. The court looks beyond the paperwork to see how the trust is connected to the marriage and how it benefits the couple.
If the trust is linked to your marriage โ for example, set up during the marriage for your benefit or used to fund your lifestyle โ the court may decide it should form part of the financial settlement.
If the trust is more remote โ such as one set up by parents or grandparents to pass wealth down the family โ the court is less likely to interfere. But even then, if trust distributions have supported the couple, that can still be taken into account.
Different types of trusts in divorce
- Nuptial trusts โ trusts created during the marriage or benefiting the couple are usually considered part of the matrimonial pot. Courts have wide powers here, including changing trustees or transferring assets.
- Intergenerational trusts โ typically set up by parents or grandparents. These are harder for courts to touch, but if one spouse has benefited significantly, it may still influence the outcome.
- Sham trusts โ if a trust has been set up purely to hide or reduce assets in a divorce, the court can and will challenge it.
- Offshore trusts โ more complex, as overseas laws can restrict what a UK court can enforce. Specialist advice is essential.
Can a trust protect assets from divorce?
The key point is that a trust might provide some protection, but itโs not guaranteed. Judges have broad discretion and will always aim for fairness. If ignoring a trust would leave one spouse without enough to meet their needs, the court can take action.
Example: Family home trust in divorce
I recently spoke with a couple who had put their former family home into a trust to protect it from being sold if they needed care later in life. When they decided to divorce, they assumed the trust would mean the home couldnโt be touched.
In reality, because the property was placed into the trust during the marriage and had clearly benefited them both, the court could still consider it as part of the financial settlement. The trust didnโt make the house โuntouchableโ โ instead, it was treated just like any other asset connected to their marriage.
This is why itโs so important to get proper legal protection through a consent order, rather than relying on a trust alone.
Why a consent order matters if a trust is involved
Even if assets are in a trust, the safest way to protect yourself financially after divorce is with a consent order.
A consent order is a legally binding document, approved by the court, that records how your finances are divided when you divorce. Without one, either spouse can make a claim in the future โ even years down the line.
If trusts are part of the picture, a well-drafted consent order ensures:
- The court has the full picture of your finances, including any trust arrangements.
- Both of you are protected from future financial claims.
- Your agreed settlement is fair and legally watertight.
At Easy Online Divorce, we prepare consent orders for all situations โ from simple clean break orders through to more complex cases involving trusts, pensions, and high-value assets.
FAQs about trusts and divorce
Do I have to declare a trust in divorce?
Yes. Full financial disclosure is required in every divorce. If youโre a beneficiary of a trust, or youโve set one up, the court will expect to see details of it. Hiding or failing to disclose a trust could seriously harm your case.
Are family home trusts safe from divorce?
Not necessarily. If the trust was set up during your marriage and both spouses benefited, the court can still take it into account. The purpose of the trust (for example, protecting the home from care fees) doesnโt automatically exclude it from divorce proceedings.
Can my ex-spouse claim assets in a trust?
They canโt claim the trust itself, but the court can adjust the financial settlement to take the trust into account. For example, if one spouse is likely to benefit from the trust in the future, the other may receive a larger share of other assets now to balance things fairly.
Can a consent order include trust assets?
Yes. A well-drafted consent order will give the court the full picture of your finances, including any trusts. This ensures the agreement is legally binding and protects both spouses from future claims.
What if my spouse created a trust to avoid divorce?
If a trust has been set up deliberately to reduce the assets available for division, the court may view it as a โsham trust.โ In those cases, judges have the power to challenge or even undo the trust.
Next steps
If youโve put assets into a trust and youโre now separating, I can help you work out how this will be treated in your divorce and guide you through getting a consent order in place.
