Recently the Society of Will Writing ‘Spring Seminar’ was held on the 18th of April at the Bridge Hotel Wetherby, enjoyed a full day of seminars from a number of speakers in regards to many different areas of estate planning which provided a thought provoking day.
One of these speakers was Mike Smith LLB TEP, who is a well known practitioner in the trust profession. Mike Smith also regularly teaches and speaks at the Society’s events in regards to the area of trusts and succession law.
In his presentation Mike discussed the use of lifetime trusts and how these would work in regards to divorce proceedings and he examined how this could affect either a settlor or a beneficiary of a discretionary lifetime trust when it comes to divorce proceedings.
The seminar confronted the misconception of lifetime trusts and the possible problems of incorrect advice being given in regards to the protection of assets in relation to divorce matters.
In this seminar Mike talked about how the Family court would view the use of a lifetime trust and highlighted these points through a number of cases, one case which was examined and stood out in my mind was the case of Whaley v Whaley.
In this case the justices looked at the facts to examine if an interest in a lifetime trust that one of the parties held was relevant, and if it should be considered as an asset of the divorcing couple and if they should consider the trust funds in any marital settlement.
The justices examined why the trust was created and how the trust had been used to determine the true meaning of the trust and in this case they found it to be the tool of one of the divorcing couples and should be considered in the settlement.
The most interesting point which was brought to our attention is the family courts are required by statute and have the authority to consider all the resources of either party. This is a test that goes beyond proprietary rights and obligations, but looks at what, on the balance of probabilities any other interests either divorcing parties holds.
Mike also explained how many errors have been made with the use of letters of wishes which have been used for these trusts in regards to excluding divorced family members. The point which was brought to our attention is to make sure a will writer fully understands that poor construction of a letter of wishes can have dramatic consequences.
The point highlight is the family court will use these letters to form evidence that will be used/ examined by the court to construct the true intention of the trust. The reason is the court wants to ensure a fair family settlement in all divorce hearings and therefore they will examine all the information they can find to see how or why a trust is created.
The effect of this presentation was to ensure we as professionals discussed this topic and viewed this in a new light and to ensure we are providing the client with the correct advice.