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Trusts in divorce: an update on the English approach

July brought the long-awaited conclusion to the latest high profile case in which offshore trusts came under attack from the Family Division in England and Wales. Mr and Mrs Akhmedova endured eight years of litigation before reaching their settlement, during which Mr Akhmedova placed assets in numerous offshore trusts and company structures and sought to benefit from the most robust firewall provisions available.

Mrs Akhmedova’s battle for her share of the marital assets saw her launch proceedings in multiple jurisdictions and recently resulted in judgements being made against her son, a company owned by both of her sons and two Lichtenstein trust entities for their participation in Mr Akhmedova’s schemes. Although proceedings were ultimately settled out of court, this case underlines how far the court was prepared to go in assisting Mrs Akhmedova. It also demonstrates, for both spouses and those who assist them, the lengths the court will go to frustrate schemes intended to defeat matrimonial claims.

General note on trusts in divorce

The extent of the family courts’ powers can be surprising to those accustomed to using company and trust structures in a commercial setting. However, the court will generally be slow to interfere with trusts which were established for legitimate purposes and were not intended to be matrimonial in nature. This is particularly so where third party rights are involved. That said, discretionary trusts will always be vulnerable to the possibility of attack within divorce proceedings and an understanding of when an invasion is most likely, is vital to ensure wealth protection strategies are as effective as possible.

 

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Trusts in divorce: an update on the English approach

 



Peter A.S. Pearman
Director, Global Head of Private Client & Trust

Bermuda   +1 441 299 4996


Christian R. Luthi
Director and Chairman

Bermuda   +1 441 298 7814


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