When couples separate or divorce, one of the most complex issues can be the treatment of a family trust. While trusts are commonly used to protect family assets, they can become a source of dispute during a relationship breakdown, especially if both partners have contributed to or benefited from the trust. At Core Legal, serving clients across Masterton and Wellington, we offer expert legal guidance to help resolve trust and property issues fairly and efficiently.

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🏡 Family Trusts and Divorce: What You Need to Know

A family trust is a legal arrangement where a trustee holds and manages assets on behalf of beneficiaries. Many families use trusts to protect their wealth from creditors, tax implications, or future relationship claims. However, this can complicate matters during divorce because technically, the assets belong to the trust, not the individual spouses.

This raises an important legal question: can assets in a family trust be divided in a divorce? In some cases, the answer is yes—through what’s called a nuptial settlement.

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💍 What is a Nuptial Settlement?

A nuptial settlement is a financial arrangement made in connection with a marriage or civil union, which benefits one or both partners. For example, if a family trust was created during the relationship and provides for both parties as beneficiaries, it may be deemed a nuptial settlement.

In the event of a divorce, a partner can apply to the Family Court for an order to distribute or alter the trust’s terms, if certain criteria are met.

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✅ Am I Eligible to Make a Claim?

To make a claim regarding a nuptial settlement, the following conditions must apply:

1. There was a valid marriage or civil union.

2. The marriage or civil union has been legally dissolved.

3. The dissolution occurred within a reasonable time frame.

4. A nuptial settlement existed and is linked to the relationship.

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🧾 How Does the Court Decide?

The Court will examine:

• The connection between the trust and the marriage.

• The financial roles and contributions of each partner during the relationship.

• The post-separation financial position of both parties.

The Court may order a lump sum payment, restructure the trust, appoint new trustees, or even split the trust into separate entities (a process known as resettlement), depending on what is fair in the circumstances.

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🔐 How Can I Protect My Trust Assets?

The most effective way to safeguard trust assets during and after a relationship is by creating a relationship property agreement. This legally binding document outlines how assets, including those in a trust, are to be divided following a separation.

If your trust is clearly addressed and fairly treated in the agreement, it can prevent future claims under nuptial settlement laws.

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📞 Need Advice on Trusts and Separation?

If you’re navigating a divorce and concerned about your family trust, our team at Core Legal Masterton & Wellington can help. We offer fixed-price Initial Consultations to ensure you understand your options without unexpected legal costs.

Contact Core Legal today to speak with our experienced lawyers about how to protect your assets and achieve a fair resolution after separation.