How Are Trusts Treated in Family Cases? Guidance for England and Wales

Introduction

Trusts often feature in family disputes where spouses or civil partners hold assets indirectly. In England and Wales the court recognises trusts but will look beyond legal form to the reality of control benefit and need. The aim is to achieve a fair financial outcome while respecting legitimate trust arrangements.

What is a trust in family law

A trust is a legal arrangement where one person or more (the trustees) hold assets for the benefit of others (the beneficiaries). Trusts can arise from wills deeds commercial arrangements or informal conduct. Courts consider the trust’s terms the trustees’ powers and who really benefits when deciding how to treat trust assets.

When trusts matter in financial disputes

Trusts matter when parties claim that assets placed in a trust lie outside the matrimonial pot. The court will examine whether trust assets are genuinely separate or whether one party retains effective control or benefit. Where a trust served purely to defeat a claimant’s financial claim the court may take a different view.

Disclosure and full financial investigation

Parties must give full disclosure of trust arrangements in financial proceedings. Trustees and beneficiaries should provide trust deeds bank statements and clear records of transactions. The court can order disclosure from third parties and compel trustees to produce documents so the true position becomes clear.

Constructive trusts and resulting trusts

Family law frequently engages with two equitable concepts: resulting trusts and constructive trusts. A resulting trust can arise where one person provides the purchase money but title sits in another’s name. A constructive trust may arise where the parties’ common intention and contributions create an expectation of beneficial ownership. The court will analyse conduct, payments and communications to identify such trusts.

Applications to set aside transfers and sham trusts

If a party transferred assets into a trust to avoid financial claims the court can scrutinise the transfer. The court can set aside dispositions made to defeat creditors or a spouse if it finds the transfer lacked genuine commercial purpose. Sham trusts, created to conceal true ownership, attract close examination and can be declared ineffective.

Trusts used for children or legitimate protection

Where trusts genuinely serve children’s interests or protect vulnerable beneficiaries the court will give weight to that purpose. The court balances the need to provide for the spouse or partner against the importance of safeguarding dependent children’s resources. Trustees with clear fiduciary duties and transparent records improve the chance that the trust will be respected.

Remedies involving trust assets

The court has several remedies where trust assets affect a fair settlement. It can make personal orders against a spouse who controls the trust, vary financial relief to reflect trust benefits or order disclosure and tracing of assets. In complex cases the court may appoint a receiver or give directions to trustees to preserve value pending final orders.

Practical steps for parties dealing with trusts

Parties should obtain specialist legal advice early, collate trust documents and be honest in disclosure. Those who wish to preserve trust assets should avoid treating them as family funds and maintain formal separation. Trustees should act prudently and keep beneficiaries informed to reduce dispute risk.

Conclusion

Trusts do not automatically put assets beyond the reach of family courts in England and Wales. The court examines substance over form, looks at benefit and control and applies equitable principles to achieve a fair result. Clear documentation early disclosure and specialist advice help resolve trust issues effectively.

Key points

– Courts look beyond legal form to control and benefit

– Full disclosure of trust deeds and transactions is essential

– Constructive and resulting trusts depend on conduct and payments

– Sham or fraudulent transfers can be set aside

– Seek specialist advice and keep trust affairs clearly separate

Alexander JLO Solicitors are well aware that going through divorce can be very difficult. Whilst the implementation of no-fault divorce back in 2022 has made the legal process much simpler, there are times, especially in relation to financial matters, when input from an experienced solicitor is vital.

With that in mind we have developed a revolutionary new service which will ascertain whether or not it’s wise to have legal advice on finances when going through divorce. Simply called Form Easy it will assess your level and type of assets and determine if you qualify for a free, no-obligation consultation to discuss your case with us and decide on the best ways forward for you. Simply click the Form Easy button, or visit the page here, answer a few short questions and we will let you have our input on whether we can help. 

At Alexander JLO we have many years of experience of dealing with all aspects of family law and will be happy to discuss your case in a free no obligation consultation. Why not call us on +44 (0)20 7537 7000, email us at info@london-law.co.uk or get in touch via the contact us button and see what we can do for you?

This blog was prepared by Peter Johnson on 1st December 2025 and is correct at the time of going to press. With over forty years of experience in almost all areas of law Peter is happy to assist with any legal issue that you have. He is widely regarded as one of London’s leading divorce lawyers. His profile on the independent Review Solicitor website can be found Here.

To follow up on any of the above please contact Guy Wilton of our family department. Guy has wide experience of acting for the firm’s clients, their family and their businesses. Guy’s experience as a lawyer started in the Northern and Welsh Circuits, including the Liverpool Courts, where he represented numerous clients after being called to the Bar, before opting to join Alexander JLO in 2017 and qualifying as a solicitor in 2024. He is a highly experienced family lawyer with a particular interest in financial remedy proceedings and child contact disputes.

Guy’s profile on the independent Review Solicitor website can be viewed here.