£120m divorce award a warning to families relying on trusts to protect dynastic wealth

A landmark divorce judgment published last week involving a £120.4 million award to the wife of a member of an extremely wealthy family could have significant consequences for high-net-worth families holding wealth through longstanding and offshore trusts, according to legal experts at Irwin Mitchell.

In TP v TF [2026] EWFC 210, the Family Court rejected the husband’s argument that his notional allocation of equity in a company (held on trust) should remain outside the matrimonial assets available for division.

Although the trusts had longstanding family and dynastic characteristics, Mr Justice Garrido found that the allocation had been used to reward the husband for his work within the family business. The judge also concluded that the wife had supported him during the marriage and enabled him to undertake the work for which the trust interest was his reward.

The court found that the trustees would be likely to make the full value of the husband’s interest available if requested. It went on to determine that the relevant trust interest had become matrimonial property and should be shared equally. The husband was ordered to pay his former wife £120.4 million, of which £114.5 million represented 50% of the trust interest.

Irwin Mitchell says the judgment is particularly significant because it demonstrates that the family court will examine the practical operation and purpose of a trust, rather than relying solely on its legal form or the date on which it was established. It also highlights the practical implications of the Supreme Court’s recent judgment in Standish v Standish [2025] UKSC 26 regarding how otherwise non-matrimonial assets (including those held on trust) can nevertheless become matrimonial through a process of ‘matrimonialisation’.

Clare Wiseman, partner and National Head of Family Law at Irwin Mitchell, said:

 

“This is a highly significant decision for wealthy families, trustees and family offices because it shows that a trust established before a marriage, or intended to preserve wealth for future generations, will not necessarily remain beyond the reach of the divorce court.

 

“The crucial issue is not simply whose name appears in the trust documents or when the structure was created. The court will examine the economic reality, including why the trust interest was created, how it operated during the marriage and whether the trustees are likely to make its assets available to one of the spouses.

 

“In this case, the court concluded that the husband’s trust allocation rewarded his work in the family business and that his wife had supported him in performing that role during their marriage. That connection between the creation of wealth and the marital partnership was central to the outcome.

 

“This does not mean that all inherited or trust wealth will automatically be divided on divorce. These cases remain intensely fact-specific, and the court has not disregarded the separate legal identity of trusts or treated trustees as being bound to follow a beneficiary’s wishes.

 

“However, families should not assume that describing a structure as dynastic, discretionary or non-matrimonial will protect it if the evidence suggests that it is, in practice, a financial resource available to one spouse.”

While independent trustees must continue to exercise their discretion properly, the history of previous distributions and the practical relationship between trustees and beneficiaries may become important evidence in a subsequent divorce.

Clare continued:

“For family offices and professional advisers, the wider message is that tax planning, succession planning and matrimonial risk cannot be considered in isolation.

 

“Trust deeds, letters of wishes and trustee governance remain important, but they need to reflect the genuine purpose and operation of the structure. If the reality is that a beneficiary can access the assets when required, the English family court may treat those assets as part of their available resources regardless of how the arrangements are described.

 

“The case also reinforces the value of properly prepared pre- and post-nuptial agreements. These are not automatically binding in England and Wales, but they can provide important evidence of a couple’s intentions and may reduce the uncertainty surrounding inherited, family and trust wealth.

 

“The £6.5 million reportedly spent by the parties on legal fees is another powerful reminder of the financial and personal cost of addressing these questions only after a marriage has broken down. Early, coordinated planning is likely to be substantially more effective than attempting to reconstruct the intended boundaries around family wealth during contested proceedings.”

Irwin Mitchell says the ruling is likely to be studied closely by specialist family lawyers, trust advisers, tax professionals, private banks and family offices. It may also encourage families to review existing wealth structures to ensure that legal documentation, trustee conduct and the family’s expectations are aligned.