Trust  

Lessons to learn about the use of trusts

  • Identify the insight that the case gives into the Family Court’s approach towards trusts.
  • Describe the methods that might be used to elicit funds from that resource.
  • List the circumstances in which such methods might be deployed.
CPD
Approx.30min
Lessons to learn about the use of trusts

The recent case of AF v SF highlights the use of a trust in cases where high net worth individuals’ wealth is largely held outside the marriage.

So, not by the husband or wife but, in this case, by a trust where the approach adopted by the court is not one of sharing but purely about (a) an assessment of the financial needs of party without direct access to the wealth, and (b) the extent to which this can be met either from the other party’s personal assets, or can be “judicially” encouraged to be paid from the trust to assist the beneficiary husband.

The case provides useful insight into the Family Court’s approach towards trusts, the methods that might be used to elicit funds from that resource and the circumstances in which such methods might be deployed.

This case raises two key questions.

Firstly, after a relationship of some 15 years in which there were two children, what were the reasonable needs of the wife?

Secondly, in circumstances where the majority of the wealth was provided to the family from a dynastic trust on the husband’s side, to what extent could the trust be called upon and relied upon to provide the resources sufficient to meet those needs?

It is easy to lose sight of these questions, instead focusing on the husband’s loss of “capacity” to represent himself or appoint his own legal team to handle the financial proceedings.

Furthermore, as the judgment describes in clear, unequivocal terms, the husband behaved very poorly, making anti-Semitic comments to the wife which were described as potentially criminal in nature.

He had publicly decried the whole court process as an act of theft of his assets and described the final hearing as a “pantomime at the Royal Courts of Talmudic Injustice”.

The husband had largely failed to engage with the court process, providing very limited disclosure, leaving the wife to guess at the existence and value of certain assets held by the husband.

As with any difficult litigant, the court process was temporarily frustrated, sadly to the financial cost of the wife.

Capacity to litigate

When the case first went before the High Court for a final hearing, the husband failed to attend.

The correspondence he sent directly to the judge alleged that the process was “one of the grossest collusions” and that “deceptions are taking place that should result in the abdication of the Crown”, which gave the presiding judge Mr Justice Holman sufficient concern to question the husband’s capacity to litigate.

The case was adjourned to consider that question and at a subsequent hearing the court found that the husband did not have such capacity.

It is important, however, to draw a distinction between the capacity to litigate and wider capacity.