How are trusts and foundations valued for divorce?

how are trusts valued?

Depending on the type of trust and its purpose, it may contain different assets of different values.  

The court will look beyond the complex structure of a trust to determine the reality of the benefits received from it by the party or parties.  

With regard to fixed trusts, it should be generally straightforward to determine the value of a party’s beneficial interest, as this will be clearly defined.  

In comparison, the trustees of a discretionary trust determine what the beneficiaries receive, how they receive them, and when. They also have the power to distribute funds to some, or just one of the beneficiaries. As such, determining the value of a party’s beneficial interest is more difficult. The court will look at the wider context behind the establishment of the trust – who set it up, when, and why. Previous payments made to the beneficiary and the terms of the trust will also be examined. 

Where a party has a beneficial interest in a trust, it will generally be advisable to instruct a financial forensic to provide an expert valuation. 

how are foundations valued?

Private foundations are legal entities established for the benefit of their founders. It may serve charitable or philanthropic purposes. Different jurisdictions have their own specific features of a foundation, but in contrast to a trust, they are marked for their distinct legal personality, though they are administered by a council or board. Given this, they typically have the rights, privileges, and powers of an individual – including the ability to own assets in its name. 

In certain circumstances, private foundations will be considered by the court when determining the wealth of the parties. To provide an accurate valuation, it will be important to obtain expert advice from a forensic accountant with specialist expertise, as the foundation may own various and unique assets which will require individual valuation. 

Vardags has years of experience working on cases involving complex assets, including those involving a trust or foundation, such as the famous ‘Chinese tigers’ case, Quan v Bray. If you require a valuation of a trust or foundation for your divorce, contact Vardags today for a free initial consultation with one of our expert divorce solicitors.  

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