Most jurisdictions have developed law, allowing parties and their estate planners to agree on how assets are to be treated in the event of separation or divorce.
However, all proceed on the basis that the assets will be divided and distributed, and all are subject to review by the courts. Trusts are one of the very few structures which enable assets to be retained intact and managed for the benefit of the family if the settlors separate or divorce.
The problem with matrimonial property disputes
The problem is that over the last decade matrimonial courts have continued to extend their jurisdiction to bring assets held by family trusts into matrimonial property disputes. Even where a trust has been meticulously managed during the duration of the trust, courts often prefer to divide the trust assets up and distribute them in lump sums to the settlors and their spouses. It is as if the trust had never existed! All the careful planning and foresight of the settlors, and decades of careful management by trustees, go out the window.
What is the solution?
Reuben Tylor, Director and Shareholder at Trustees & Fiduciaries Cook Islands developed the International Relationship Property Trusts Act in direct response to this problem.
- The IRPTA provides a statutory certainty whereby couples can choose to keep designated trust assets intact, in defined shares and under common management, in the event of their separation or divorce.
- It also restricts the recognition of judgments of foreign courts from interfering with this principle. Family businesses are also particularly susceptible to the separation or divorce of the shareholders.
Learn more about this innovative trust product, explore the links below for more information. If you are interested in establishing an International Relationship Property Trust get in touch with one of our Cook Islands based Trust Companies.
