Trust assets on divorce

[stewamax]

A mother of three adult children puts her house in a discretionary Trust with the three children as Trustees.
The husband of one of them now wants a divorce.

The Trust Deed gives the Trustees wide discretion as to how the value of Trust asset – the house – is to be disposed after the death of the mother.
(In passing, the Trustees are on the best of terms with each other.)

During the future divorce settlement, what claim would the divorcing husband be likely to have on the asset.

To pre-empt a question, I am not personally involved and have no idea why the house was in Trust in the first place!

[tjh290633]

As far as I can see the Trustees are the Trustees and their spouses are not involved. The divorcing partner is not a Trustee and even before the divorce has no say in what the Trustees decide. In the event of the mother's death after they divorce, this has no effect on any divorce settlement.

IANAL

TJH

[genou]

We don't know enough to make any firm comments. I assume that the mother has a liferent over the house, and I can't imagine the court disturbing that. We don't know why the house is in trust - it is an odd arrangement, but the reasons might cast light on how the court would view the trust. If the trust was found to be nuptial, the court has very wide discretion.

Absent fine detail on the discretion given in the trust, we can't know what expectations the divorcing wife has of its assets. Has she remainderman rights over any of the trust ? If she has, that remainder could be treated as an asset. Not necessarily to be taken from her; but if, say, she raises a claim on the husband's pension, he can point to the trust assets and ask for offset.

[stewamax]

Many thanks for that.
I am awaiting a copy of the Trust Deed - not to give legal advice* but to better guide any conversations I have with them. In particular, I want to ascertain how much discretion the Trustees have (vs specified remainderman obligations)

I was also very surprised to hear that the house was in Trust, not in a Will Trust but already in Trust, with the liferent mother currently in residence.

genou's point: "we can't know what expectations the divorcing wife has of its assets. Has she remainderman rights over any of the trust ? If she has, that remainder could be treated as an asset. Not necessarily to be taken from her; but if, say, she raises a claim on the husband's pension, he can point to the trust assets and ask for offset." is precisely what I am trying to clarify


* I have told the Trustees that they should plan to see a STEP or similar solicitor

[stewamax]

Had the house been left by Will to the three children, the additional £175K residence nil rate band allowance against mother’s IHT would be available.
Am I right in thinking that there is no equivalent for the house now in Trust ?

[genou]

Had the house been left by Will to the three children, the additional £175K residence nil rate band allowance against mother’s IHT would be available.
Am I right in thinking that there is no equivalent for the house now in Trust ?

Yes - no-one is "closely inheriting" the house, so there is no NRNB.

[stewamax]

Many thanks genou.
Then it puzzles me yet more why the house was ever put in Trust in the first place! I think mother had a 'Financial Advisor...
And I cannot wait to see the Trust Deed