Understanding Trusts in High Net Worth Divorce

Written by Katie McCann, Barrister | High Net Worth Divorce and Matrimonial Trust Specialist. Last Updated: January 2026.

Dividing assets is often challenging, but none more so than when you are negotiating trusts in high net worth divorce. Whether you’re seeking to protect or challenge the future of a trust, understanding how our courts treat them is crucial.

For families with significant wealth, trusts often hold substantial assets – from investment portfolios and business interests to property and offshore holdings. The question of whether these funds are protected from divorce depends on multiple factors including the type used, when it was established, who benefits from it, and whether it has genuine independence from the beneficiary spouse. 

This guide explains how trusts and divorce intersect in English law, updated to include the latest case law developments.  

Trusts and Divorce: How Does it Work?

There are a number of ways that trusts in high net worth divorce cases can be handled and assessed. If there is a dispute which needs to go to court, the judge will look at several factors to determine whether the assets will be divided or not. 

Financial Resources & Nuptial Trusts 

A spouse who does not have access to the trust can argue that it is a financial resource or a nuptial trust and should therefore be included in the division of assets. It is the job of the beneficiary’s legal team to argue that the funds should not be considered in the case.

When determining whether a trust is a financial resource, a court will look at a number of factors. A fixed trust, where a beneficial interest can be valued, is likely to be considered a divisible asset. The same is true in cases where the beneficiary receives regular income from the trust. In situations involving discretionary trusts, a court may decide that the beneficiary’s share of the assets can be divided if they are likely to receive income immediately or in the foreseeable future.   

Nuptial trusts involve a connection between the assets within the trust and the relationship itself — such as ones containing the family home, or those which were set up in preparation for marriage. The court will assess several elements, such as the identities of the beneficiaries and settlor, when the trust was set up, and the expressed interests included in the letter of wishes, to decide whether the assets should be divided.  

Onshore vs Offshore Trusts

How difficult it is to obtain disclosure of assets within trusts in high net worth divorce cases may depend on where it is located. For those based within England and Wales, the court can make a request to provide information which will need to be adhered to.

This is not the case for offshore trusts, which are common in cases involving significant wealth. While some international trustees may comply with the information request, others could ignore it entirely.

Types of Trusts: How Each is Treated in Divorce

Understanding how each type of trust is affected by divorce is crucial, as courts treat varying structures differently when dividing assets.

Discretionary Trusts in Divorce

What They Are: Trustees have full discretion over whether and when to distribute income or capital to beneficiaries. No beneficiary has an automatic right to trust assets.

Divorce Treatment: Courts examine whether the beneficiary spouse has realistic access to trust funds. If trustees have historically made regular distributions, or the beneficiary effectively controls the trust (e.g., acts as both trustee and beneficiary, or trustees always follow their wishes), the court may treat it as a financial resource. However, genuinely independent discretionary trusts where distributions are uncertain may receive more protection.

Key Factor: The court looks at the “reality” of the situation, not just the legal structure. A discretionary trust that distributes £100,000 annually to fund the family lifestyle will be treated very differently from one that has never made a distribution.

Fixed Interest Trusts in Divorce

What They Are: Beneficiaries have a defined, fixed entitlement to trust income or capital (e.g., “50% of income to spouse A”).

Divorce Treatment: These are almost always treated as divisible assets because the beneficial interest can be valued. If you have a fixed 25% interest in a £2 million trust, that £500,000 is likely to be considered part of your assets for divorce purposes.

Bare Trusts in Divorce

What They Are: The beneficiary has an absolute right to both the capital and income once they reach 18. The trustee is simply a nominee holding legal title.

Divorce Treatment: Treated as the beneficiary’s asset outright. There is no discretion involved, so these trusts offer minimal protection in divorce proceedings. The court will include the full value in the matrimonial pot if the beneficiary is of age.

Protective Trusts in Divorce

What They Are: Designed to protect a beneficiary’s interest from creditors or bankruptcy. If the beneficiary tries to dispose of their interest or becomes bankrupt, the trust converts to a discretionary trust.

Divorce Treatment: Courts scrutinise these carefully. While they may offer some protection, if the trust was established specifically to defeat a divorce claim, courts can look through the structure. Timing of establishment is critical; with protective trusts set up during (or immediately before) divorce proceedings raising red flags.

Offshore Trusts in Divorce

Trusts established in jurisdictions like Jersey, Guernsey, Isle of Man, or the Cayman Islands present unique challenges. While English courts cannot directly vary offshore trusts, they can:

• Order the beneficiary spouse to request distributions from trustees.
• Make adverse inferences if the beneficiary refuses to cooperate.
• Award the non-beneficiary spouse a larger share of other assets to compensate.
• In extreme cases, find the beneficiary in contempt if they fail to comply with orders.

The courts can take a robust approach to offshore trusts, particularly where the beneficiary has effective control despite the trust’s apparent independence.

Notable Case Law on Trusts and Divorce

Courts continue to refine their approach to trusts and divorce, with recent judgments clarifying when trust assets can be attacked.

The Continued Relevance of Charman v Charman (2007)

This landmark case established that courts should look at the “reality” of a spouse’s access to trust assets, and not just the legal formalities. The principles are still applicable. They are:

• If the beneficiary effectively controls the trust, it’s a sham for divorce purposes.
• Regular distributions to fund lifestyle indicate the trust is a financial resource.
• Courts can “pierce the veil” of trust structures used to hide matrimonial assets.

WM v HM (2017) – Still Influential

This case involved a £20 million offshore trust. The court found that although it was validly constituted, the husband had enough influence over the trustees for distributions to be expected. The trust was therefore treated as a financial resource, showing that influence over trustees matters as much as formal control. If family members are trustees, or if the settlor (the person who created the trust) is also a beneficiary with ongoing involvement, the trust’s independence becomes questionable.

Recent Case Law Trends

The latest decisions show that the courts are increasingly willing to:

• Look through complex trust structures where the beneficiary spouse effectively controls distributions.
• Draw adverse inferences when offshore trustees refuse to provide information.
• Award compensatory lump sums from other assets when trust assets cannot be directly accessed.
• Consider trusts established before marriage as part of the matrimonial pot if they’ve been used to fund the family’s lifestyle throughout the marriage.

The Potanina vs Potanin Case (2025)

Following the Russian oligarch’s divorce, the Supreme Court confirmed that English courts have jurisdiction over foreign nationals’ trust assets if they are habitually resident in England. This reinforces that international trusts cannot be used to avoid English divorce law simply by placing assets offshore.

Therefore, if you’re a beneficiary of an offshore trust and divorcing in England, it’s realistic to assume the court will find a way to factor those assets into the settlement. Particularly if you’ve received distributions or have influence over trustees.

Are Assets in a Trust Protected From Divorce?

Assets in a trust are not automatically protected from divorce. A court will need to decide whether the trust is a financial resource or a nuptial trust, or if the trust was created to deliberately try to defeat a matrimonial claim. If any of these are found to be true, the funds will be considered as part of the divorce settlement. 

It is the court’s responsibility to ensure that both parties achieve a fair outcome. It therefore needs to consider the financial assets of both parties, whether they’re available now or in the foreseeable future, when making its decision. 

How is a Trust Divided in a Divorce?

If the court decides trust assets should be divided, it can issue an order which varies the trust so funds are made available to the non-beneficiary, or award the non-beneficiary a greater share of non-trust assets. The assets within a trust are therefore treated as either capital or income, depending on what the court feels is most appropriate.

Should the courts feel that trusts in high net worth divorce cases have been set up to deliberately frustrate a claim or avoid a full financial disclosure, it will take a much harsher stance. This is why it’s important to seek specialist legal advice when setting one up — to ensure it’s being done for the right reasons. 

Can I Put My House in a Trust Before Divorce?

While, legally, you can put your house in a trust before divorce, it doesn’t automatically protect it from the final settlement. In fact, establishing any trust, whether for your house or other assets, during or right before divorce proceedings, is extremely risky and likely to backfire.

Why Courts View This Negatively

This approach can be seen as a deliberate frustration of claims: If a court believes you’ve created a trust solely to hide assets or defeat your spouse’s financial claims, it can:

• Doubt Your Credibility: This could undermine your trustworthiness in the judge’s eyes, harming your entire case.
• Add Back the Assets: Treat the trust as if it doesn’t exist and include the full value in the matrimonial pot.
• Draw Adverse Inferences: Assume you have access to hidden funds, potentially awarding your spouse a bigger share.
• Order Cost Penalties: Order you to pay your spouse’s legal costs for the additional work caused by your attempt to obscure assets.

The “Disposing of Assets” Problem

Courts treat establishing trusts during divorce similarly to disposing of assets before divorce. Both can be reversed if they are only done to frustrate claims. The court has wide powers under section 37 of the Matrimonial Causes Act 1973 to set aside any transactions intended to defeat financial claims.

Practical Example: A husband transfers £500,000 into a trust “for the children” three months before filing for divorce. The court finds that this was done to reduce his apparent wealth and adds the full amount back into the matrimonial pot for division purposes. He is also ordered to pay additional legal costs.

When Trusts CAN be Legitimately Protective

Trusts established well before marriage, or those set up for clear non-divorce purposes (such as inheritance planning, asset protection from business creditors, or special needs planning for children) are viewed very differently from those created when divorce is imminent.

Therefore, they are most likely to work when:

• Established years before any marital problems arise.
• Created for legitimate non-matrimonial purposes (inheritance, business succession, protecting vulnerable beneficiaries).
• Genuinely independent trustees manage them.
• The beneficiary spouse doesn’t have effective control.
• They haven’t been used extensively to fund the family lifestyle during marriage.

Creating Trusts to Protect Future Inheritance

If you expect to inherit money during ongoing divorce proceedings, placing it in trust won’t necessarily protect it. Courts can (and do) consider post-separation inheritances as part of the financial settlement, particularly if the matrimonial pot is insufficient to meet both parties’ needs.

Perhaps a better approach for protecting future wealth would be to consider a postnuptial agreement while the marriage is still intact. Also, try to ensure that any inherited funds are kept completely separate from marital finances if you do inherit during proceedings.

The Bottomline? Don’t Try This Alone

If you’re considering any trust arrangements in the context of divorce:

1. Seek specialist legal advice immediately.
2. Be open and transparent about your intentions.
3. Understand that courts prioritise fairness over clever structures.
4. Consider whether there are legitimate non-divorce reasons for the trust.
5. Document everything properly if you choose to proceed.

Attempting to hide assets in trusts could ruin your credibility and potentially worsen your financial outcome. In extreme cases, it might even lead to a criminal conviction.

Divorce Settlement FAQs

Are trust assets protected from divorce?

No. Courts assess whether the trust is a genuine, accessible financial resource, whether it is nuptial, or whether it was created to defeat divorce claims. Pre-marital, independent trusts may offer the strongest (but still not absolute) protection.

Can my ex-spouse claim against a family trust?

Possibly. If you lack control and are one of many beneficiaries, it’s typically less vulnerable. Regular distributions or influence over trustees make it more likely to be treated as a matrimonial resource.

What happens to a trust after divorce?

It depends on the settlement. The court may vary the trust, order distributions, or offset its value by awarding the other spouse more non-trust assets. Trusts should be reviewed post-divorce.

Can I hide assets in an offshore trust?

No. Courts can infer hidden wealth, order you to seek distributions, penalise you in asset division, or hold you in contempt. Asset concealment is illegal and can be highly damaging.

Do trust assets have to be disclosed?

Yes. Full financial disclosure is mandatory in England and Wales. This includes beneficial interests, trustees, distributions, and value. Non-disclosure risks criminal penalties and reopening the settlement.

Should I set up a trust before divorcing?

Usually not. Trusts created during or near divorce are much more likely to be disregarded. Asset protection must be done well in advance for legitimate purposes.

What does it cost to challenge a trust?

It varies, depending on complexity, experts required, and offshore issues. Costs may amount to tens of thousands when substantial assets are involved.

Can a discretionary trust be divided?

Not directly. Courts may order variations, require distribution requests, or adjust other asset awards based on access to trust funds.

Expert Advice on Trusts in High Net Worth Divorce

If you’re separating with any valuable assets at stake, specialist legal advice is always essential. Trusts in high net worth divorce cases can be highly complex, requiring a sophisticated understanding of both family law and fund structures to achieve the best possible outcome.

How Lowry Legal Can Help

Our experienced team has extensive knowledge of handling trusts and divorce, particularly in more complex cases. We can:

• Analyse whether trust assets should be considered part of the matrimonial pot.
• Challenge trusts that are being used to hide assets from you.
• Defend legitimate trust structures from unreasonable claims.
• Work with forensic accountants to value complex trust holdings.
• Navigate offshore trust disclosure issues across multiple jurisdictions.
• Arrange advice on tax-efficient settlement structures involving trust distributions.
• Coordinate with tax advisers and financial planners to protect your interests.

Our Approach

Based in Manchester and serving clients throughout England and Wales, we understand that trusts and divorce intersect with broader wealth management and estate planning concerns. Our holistic approach means we can help you not only navigate your immediate divorce settlement but also plan for protecting your wealth going forward.

Whether you’re concerned about offshore trusts in divorce, need to understand how the asset could be divided, or are wondering if you can put your house in a trust before divorce, we provide clear, strategic advice tailored to your unique circumstances.

Lowry Legal’s mission is to achieve the best possible outcome for our clients, combining robust legal expertise with a pragmatic, client-focused approach.

Contact us today for expert guidance you can rely on.