Whether your financial settlement is agreed between you and your spouse or made by a family judge in court, the division of assets must be fair. That is why all the financial resources of both parties must be taken into account.
The court will consider various factors to decide whether a trust is a financial resource. If the trust is fixed, it means your beneficial interest is defined and can be valued. A court will also consider whether and when you will have access to the trust funds. For example, if you have been receiving regular income from the trust, it is very likely to be taken into account. If there is no indication when the trust assets will become available, the court is much more likely to disregard them.
Discretionary trusts and divorce
With a discretionary trust, there will be a class of beneficiaries who could inherit and the trustees will have control over when and whether the beneficiaries receive proceeds from the trust. They are often used as family trusts as they provide trustees with flexibility (for example, to leave money to grandchildren who may not have been born at the point they made their Will).
If you are one of a class of beneficiaries under a discretionary trust, then the court can treat your interest as a financial resource in the divorce proceedings if you are likely to receive trust assets immediately or in the foreseeable future. Any evidence could assist the court in this, for example, statements of intent from the trustees.
Where the court has decided a discretionary trust should form part of divorce financial proceedings, it has various powers, including:
Providing "judicial encouragement" to the trustees to make payments to the beneficiary spouse
Offsetting the value the beneficiary spouse may receive by allowing the other spouse a greater share of the non-trust assets
If the trust is also a "nuptial trust", it may order a variation so that the non-beneficiary spouse benefits