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International Trust and Divorce Litigation

FROM £75.00

A practical guide for offshore lawyers, trust companies, private bankers and matrimonial lawyers who represent high net worth clients.

This edition is an invaluable source of detailed information in respect of international trusts, viewed in a divorce law context and including an offshore perspective. It provides a readable, yet authoritative, analysis of such topics as forum shopping, conflicts of law, enforcement and asset protection legislation.

International Trust and Divorce Litigation is an indispensable practical guide for offshore lawyers, trust companies, private bankers and matrimonial lawyers who represent high net worth clients.

Read More:
  • OVERVIEW AND EXPLANATION OF TRUSTS
  • JURISDICTION FOR DIVORCE AND TRUST MATTERS AND APPLICABLE LAW
  • ENGLISH ASSET DIVISION ON DIVORCE
  • TRUSTS VULNERABLE TO THE IMPACT OF DIVORCE ORDERS
  • NON-DIVORCE LINES OF ATTACK ON TRUSTS
  • PRACTICE AND PROCEDURE FOR DIVORCING SPOUSES AND TRUSTEES
  • INTERNATIONAL ENFORCEMENT ISSUES RELATING TO TRUSTS
Read the full contents as a PDF
“detailed information ... a valuable source of reference. There is a scarcity of detailed literature devoted to trust/offshore issues in a matrimonial context ... this readable book helps fill that void ...”
Solicitors Journal

"The purpose of the book is perhaps two-fold: first, to explain the relevant law of trusts to family practitioners whilst likewise explaining the relevant family law to trust practitioners; second, to provide a practical handbook for practitioners of all disciplines who are involved in divorce litigation whether here or in foreign jurisdictions. The balance between rigorous analysis – too often lacking in the past – and practical advice is excellent.

Not the least valuable part of the new edition is Chapter 7, which contains a survey of trusts and divorce in no fewer than 16 other jurisdictions, ranging from Australia to Switzerland, which the domestic practitioner may become involved with.

I can do no better than adopt as my own the words of Mr Justice David Hayton of the Caribbean Court of Justice in his most interesting Foreword: ‘This is a much needed book . . . It provides practical advice and insights, soundly based on clear legal analysis. The editors have done a remarkable job in bringing much clarity to complex areas of domestic and private international law.'
This is a book which needs to be in the bookcase and in the briefcase of everyone involved in a divorce case with a trust element.

Any divorce practitioner involved with a trust would do well to consult this book. After all, we need to remember that it was a proper application of the law of trusts, and nothing else, which led to the wife's ultimate success in Prest v Petrodel."
SIR JAMES MUNBY
Family Law journal


"the most important element of this leading work is the way it addresses divorce litigation juxtaposed with trust litigation. In other words, it brings them together in an extraordinarily helpful way...For any lawyer who has wondered why the power in s24 of Matrimonial Causes Act 1973 is to be so feared, is concerned about the difference between prenuptial and postnuptial settlements, or just wants to understand what is likely to happen when that carefully drafted trust is subject to the analytical eye of the divorce lawyer, this is a vital work...invaluable for any offshore trustee who gets caught in the crossfire of the warring parties...this book will leave that trustee forewarned and therefore forearmed to deal with the slings and arrows of outrageous fortune...All those connected with its publication should be thanked for leaving us with such an excellent source of wisdom and guidance."
Edward Buckland
STEP
For the full review click here
FOREWORD
‘This is a much needed book’, as I opened my foreword to the first edition published over five years ago. This second edition takes in significant developments since then in English divorce case-law and in jurisdictions hosting trusts, now covering Australia, Bahamas, Bermuda, BVI, Cayman Islands, Cyprus, Gibraltar, Guernsey, Hong Kong, Isle of Man, Jersey, Liechtenstein, Mauritius, New York, Singapore and Switzerland. It provides practical advice and insights, soundly based on clear legal analysis. The editors have done a remarkable job in bringing much clarity to complex areas of domestic and private international law.

It explains how an increasing number of jet-setting spouses with an English base can invoke the English courts’ divorce jurisdiction focusing upon the sharing principle, rather than the needs of the parties, and providing a diverse range of financial remedies. It spells out the exceptionally limited extent to which trusts set up by a spouse can be attacked as a sham and sets out other principles of trust law which may be used to impeach the validity of a spouse’s trust. It considers the extensive jurisdiction of the English divorce courts to vary the beneficial provisions even of a foreign trust set up by a spouse or spouse’s parent or other relative as an ante or post-nuptial settlement (as broadly defined), though explaining the unlikelihood, unless the relevant assets are located in England, of such variation being recognised in the foreign trust jurisdiction. More significantly, therefore, it examines the extent to which assets comprised in a trust can be considered to be an available resource of a spouse, as opposed to property of a spouse, when making financial orders against a spouse.

Available resources of a spouse are ‘financial resources which’ he or she ‘has or is likely to have in the foreseeable future’ under s 25(2)(a) of the Matrimonial Causes Act 1973. The availability of such resources to a respondent beneficiary of a trust can lead the judge to make a financial order against the respondent that is much greater than that which would be ordered taking account only of the respondent’s own property. Such greater order, according to Waite LJ in Thomas v Thomas, ‘affords judicious encouragement’ to the trustee to provide the respondent with the means to comply with the court’s view of the justice of the case, so that the respondent’s standard of living is not unduly depressed The intra vires exercise of a foreign trustee’s powers does not fall foul of ‘firewall’ provisions designed to refuse recognition to English court orders (eg orders varying a trust’s beneficial terms). However, the pressure on the trustee to exercise its distributive powers to ameliorate the respondent’s position does interfere with the discretion of the trustee and will normally make it seek confirmation from its local court that the distribution it proposes to make is within the parameters allowed for the exercise of its discretion, taking account of the interests of other beneficiaries. Indeed, looking ahead to such possibility, it may well be sensible for the trustee to obtain leave from its local court to provide the English divorce court with relevant honest information as to the likelihood of it making financial resources available to the respondent in the foreseeable future, without it becoming a party to the English proceedings.

In making findings as to available resources of a respondent who is a beneficiary under a trust, especially if he were the settlor, divorce judges have taken a robust sceptical approach to what he and the trustees allege. Some took too much of a robust cavalier approach, but Sir James Munby was an exception in emphasising the need for respect for the integrity of trusts (see his excellent Chancery Bar Association Annual Lecture, 2011, reproduced in (2011) 17 Trusts & Trustees 809) and he has become the new President of the Family Division. He has made clear the need to identify the trustee’s untrammelled power, how the power has been exercised in the past and how the power is likely to be exercised in the foreseeable future eg if the respondent requests financial assistance, taking account of the position of other beneficiaries – unless the terms of a trust provide for the respondent to be regarded as the principal beneficiary to whom payments may be made without considering the interests of other beneficiaries.

The Hong Kong Court of Final Appeal (including Lord Clarke of the UK Supreme Court) has taken the same approach in 2013 in Kews v NCHC and, indeed, has indicated that it would be better if the term ‘judicial encouragement’ were no longer to be used. Its use could mislead some judges to make financial orders that put undue pressure upon a father to use his own money, or trustees to use trust money to assist the respondent beneficiary. However, if trust resources are regarded as available for the respondent when he requests them due to any particular need, then it does not matter that the order of a divorce court against him in favour of his ex-wife creates his need for money from the trust.
The powers of divorce courts in 15 other jurisdictions are then considered as well as a brief summary of the difficulties there are in those jurisdictions in attacking trusts or recognising and enforcing foreign divorce court orders, especially where there are ‘firewall’ provisions. ‘Practice and Procedure for Divorcing Spouses and Trustees’ are then covered in practical detail followed by a learned enlightening chapter on ‘International Enforcement Issues Relating to Trusts’.

I am delighted to welcome this second edition as even more useful than the first edition. It well deserves a place in the bookcase of trust lawyers and divorce lawyers, incidentally providing a pro-active primer to help to avoid problems while providing a practical re-active guide once divorce proceedings have commenced.

The Honourable Mr Justice David Hayton LLD, TEP (Hon), ACTAPS (Hon)
Caribbean Court of Justice, Trinidad
27 May 2013

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PREFACE

This book aims to provide a practical guide for divorce and trust lawyers, trust practitioners, private bankers and others representing high net worth clients. We hope it will help those in the wealth planning and trust world to understand better the approach of the English Family Division to trusts on divorce, and matrimonial lawyers to understand trusts better, as well as giving an insight into how the courts of other jurisdictions deal with trusts on divorce.

Since the First Edition, there have been substantial developments in this fascinating area of law and, further, undoubtedly significant changes are on the horizon. As we go to press, the Supreme Court’s judgment in Prest v Petrodel Resources Limited and others, which could significantly impact upon the Family Division’s approach to trusts, is awaited. [Now see Addendum following.]

Likewise the Law Commission’s final recommendations on marital agreements, the treatment of nonmatrimonial property and the issue of needs, due later this year, will aim to provide a greater certainty of outcome for divorcing spouses.
Our thanks go to our co-authors and everyone at Withers who has helped us with this book, in particular, Richard Walker, Karen Lai and Myfanwy Probyn. We also thank Mr Justice Hayton for writing the Foreword, and the many foreign lawyers who have provided invaluable contributions and have helped us to understand their law on this subject.

Mark Harper,
Dawn Goodman
London, May 2013

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