Case law: Court clarifies when assets held by third parties can be taken into account on divorce

Spouses should consider whether assets held by companies, or under other company structures, could be taken into account when a court is considering a financial settlement on divorce, because the assets are held on a resulting trust for one spouse, or pursuant to a 'nuptial settlement'.

On divorce, the courts have power to vary 'nuptial settlements'. This means they can treat assets held by a third party as available to divide up between the spouses when deciding on a fair division of the assets. There is no definition of nuptial settlement but the courts have described it as "some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children". This can include putting assets into a family company or other corporate structure.

Alternatively, the courts may decide that the circumstances in which assets are transferred to a company (or group structure) create a resulting trust - so that the company/ies are to be treated as holding the assets on trust for one of the spouses, rather than owning them outright.

In a recent case, land and building in the UK worth £18 million was held in a complicated family company structure owned ultimately by the husband.

The High Court held that the companies held the assets on a resulting trust for the husband - which meant they could be taken into account by the court when deciding which assets were available to be divided between the husband and wife on their divorce.

The High Court also said that had it decided differently under the resulting trust rules, it would not have treated the company structure as a nuptial settlement, capable of being varied to make the assets available when calculating the divorce settlement. However, it would have ordered the companies to provide the wife with accommodation for life (under a notional license to occupy).

Operative date

  • Now


  • Spouses should consider whether assets held by companies (or within other company structures) might be treated as available when a court is considering a financial settlement on divorce, on the basis that the assets are held by the companies on a resulting trust for one of them, or pursuant to a 'nuptial settlement'

Case ref: Chai v Peng & Others [2017] EWHC 792 (Fam)

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