The English courts have highlighted their willingness to look at the assets of offshore trusts, with...
The English courts have highlighted their willingness to look at the assets of offshore trusts, with the recent award of £48m in the UK's largest-ever contested divorce settlement.
In the Charman v Charman case, the Court of Appeal upheld a previous decision which gave Mrs Charman 36% of the parties' assets.
One of the main issues was whether an offshore trust, worth around £68m, should be taken into account when deciding the financial sum Mrs Charman would be awarded. Mr Charman had argued the trust should not be included in the settlement because it was a 'dynastic trust' and formed an essential part of his long-term estate planning. However, the Court of Appeal agreed it could be taken into account.
Richard Williams, group head of risk and compliance at Investec Trust, said elements of the case highlighted a worrying trend where offshore trusts were involved. He said: "This case is reinforcing the willingness of the family division of the High Court in London to really look through offshore trust arrangements and to treat the assets as if they still belong to the husband and/or wife.
"That creates a huge problem for offshore trustees such as ourselves, because if an order is made in the London divorce proceedings, for example that the husband must pay X and in practice that X is tied up in a trust, we might not be able to give effect to that judgement."
Williams said the other issue was whether trustees should become party to big money divorce proceedings in London.
Morven McMillan, associate - joint head of trust and fiduciary disputes at law firm Charles Russell, said Mr Charman's counsel made a play of the fact the Court of Appeal was being asked to make a finding in relation to a trust which was subject to Bermuda law.
She said: "The law is clear, whether a trust is subject to the laws of an overseas jurisdiction or is an English law trust, if it complies with the various matrimonial rules, it will be taken into account as a resource."
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