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So in my reading I've come across a case (Prest v Petrodel) where a man wholly owned several companies, and purchased property in their name, but basically treated it as his property.

Anyway, it was found by the UK Supreme Court that because he contributed 100% towards the purchase price of the properties, those properties were therefore held on resulting trust for this man.

And so in handling a divorce, these properties counted as his assets, and ownership of some properties were awarded to the wife.

Now my question is - resulting trust aside - what if he held those properties in a trust for himself and someone else (say, 1 percent beneficial interest towards another company he set up, and 99 percent for himself). For the sake of argument lets say he did this way before divorce proceedings, or even before marriage

Let's say the terms of this discretionary trust were that the trustees had to give the beneficiaries the property after 60 years. Since the man is trustee he essentially can do what he wants with the property except for selling it etc.

So if the court awarded his 99% interest in the trust to the wife. How could she access the trust property?

The man as trustee is not obliged to hand over beneficiaries the property until 60 years has passed. He can use it as his own since he is trustee, and she cannot dissolve the trust under Saunders v Vautier, because it requires unanimity by all beneficiaries, and since he controls the company that owns the 1% interest, he can direct it to refuse the dissolution of the trust.

Would such a trust arrangement effectively prevent her from enjoying the property before the trust ends?

  • It depends upon who creates the trust. A self-settled trust is almost always going to be problematic. If your dad creates a trust for your benefit his your dad's money and it is merely for your benefit, it can be almost bullet proof (especially if there are multiple potential beneficiaries and wide discretion to the trustee). Different parts of the U.K. have different fraudulent transfer laws governing this issue. – ohwilleke Oct 16 '17 at 16:56
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Not at all

Jurisdictions differ but to take, for example, Australia:

The Australian system for dividing the matrimonial assets on divorce is a ‘separate’ property regime. On separation, the starting point when dividing property is that each spouse retains ownership of the property legally theirs. This is, however, only a starting point. Under the financial provisions of the Family Law Act 1975, the Family Court has the discretionary power to alter parties’ property interests on marriage breakdown if it is satisfied that, in all the circumstances, it is just and equitable to make the order. Exercising this power requires the court to consider the parties’ respective contributions to the property and other factors including their future needs. Where spousal support is sought in addition to a property order, it becomes the final stage in the process.

The Family Court can make any order they like: they could dissolve the trust, they could grant a life interest, they could order the property sold etc. so long as it was "just and equitable".

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    Thanks for your answer, but I'm not sure if this applies in English law. Consider Thomas v Thomas [1995] 2 FLR 668, where the court admits that they cannot forcefully dissolve a discretionary trust in order to allocate its assets to a divorcing spouse; they can only encourage trustees to excercise their powers for the spouse, or consider the value of the the "losing" spouse's interest in the fund as part of their total assets for calculating alimony. This is echoed in Charman v Charman [2007] so I dont believe is out of date – Shazamo Morebucks Oct 16 '17 at 10:26

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