A recent case in Jersey addressed the role of trustees of a Jersey discretionary trust in a beneficiary’s divorce proceedings. It also considered the extent to which the trustees can protect the interest of beneficiaries of a trust who are not parties in the divorce proceedings. This case may be of particular relevance to a person who is or whose spouse is a beneficiary of a Jersey discretionary trust.

In divorce proceedings the parties to the divorce must disclose to the court details of all their assets. The court then decides how to distribute those assets between the parties. Difficulties can arise where a spouse has few assets but is a beneficiary of a discretionary trust. Until the trustees of the discretionary trust decide what each beneficiary of the trust should receive the beneficiaries do not have a definite or quantifiable interest.

The case involved the trustees of a Jersey discretionary trust requesting the Jersey court to approve a decision they made regarding the trust. The decision was made in the context of divorce proceedings before the English courts. The husband in the English divorce proceedings set up two discretionary trusts in Jersey for the benefit of himself, his children and his partner. His wife argued in the divorce proceedings that she expected the trustees of the Jersey trusts to make a distribution to the husband from the trusts to enable him to satisfy any award made to her by the English courts.

Concerns were expressed by the husband’s partner in respect of her entitlement as a beneficiary of the trusts. Therefore, the trustees proposed to appoint 40% of the net assets of the trusts to the partner and her two children. The Jersey court approved the trustees’ decision to make the appointment. The Jersey court also approved the decision of the trustees to provide information to the English courts including details of trust assets to assist in determining the extent of the assets of the husband for the purposes of the divorce proceedings.

This decision confirms that where a party to divorce proceedings is a beneficiary of a Jersey trust, the trustees are permitted to indicate to a foreign court the extent to which a beneficiary could benefit under the discretionary trust.

This case also confirms that in the context of foreign divorce proceedings trustees of a Jersey trust will not disregard the interests of other beneficiaries in favour of a beneficiary who is involved in the divorce proceedings. Finally, the trustees will also provide information to foreign courts where requested.