Divorceadvice on division of assets in relation to trustsWhichever way you look at it, divorce isusually a bruising process and it is oftenthe division of the assets which causesmost acrimony. After the failure of a marriage, both parties willinevitably feel that they have some claim to theassets that had been enjoyed by them. Thevalue of houses, investments and other propertyare relatively easy to identify and so they will allbe brought into the divorce proceedings. More difficult though is to make a claim onassets which are seemingly out of reach ofeither the husband or wife, for instance if theyare shielded by a trust. A trust is essentially astructure under which assets are held bytrustees to manage them for the benefit of one of more beneficiaries. There are two different types of trust which may be relevant in divorce proceedings. An interest in possession trust is one in which the husband or wife is entitled to the income. What the courts look at is therelationship between the beneficiary and thetrustees and whether, if the beneficiary askedfor capital, the chances are that the trusteeswould give it to them. The other type of trust is discretionary; abeneficiary is not entitled to receive anythingbut instead there is a class of potentialbeneficiaries. This means that the trusteesdecide who does or does not receive a benefit.The courts are increasingly looking behindthese trust structures to consider: who madethe trust and what its purpose was, whetherpayments have been made in the past to abeneficiary and whether the trustees haveusually followed the wishes of the beneficiary. Even trusts held offshore can be brought intoaccount by the courts now. There have been a string of high profile cases,most notably Charman v Charman, where nearly50% of the husband's £130 million fortune washeld in an offshore trust in Bermuda. Onappeal, the wife successfully argued that thetrustees would be likely to exercise their powersfor the benefit of the husband and her share wasincreased to 37% of all the husband's assets. However, not all trusts are caught. In A v A2007, the wife failed to show that the trust wasa sham. Cripps Harries Hallfamily specialistpartner, Amanda Andrews, comments, "justbecause assets are held in an offshore trust,does not make it a sham trust. The mere factthat the trustees happen to agree with abeneficiary on a course of action does notnecessarily mean they have not exercised theirindependent discretion."On wills, Mary-Anne Gribbon, private clientpartner at Cripps, comments "parents who areworried about their child's matrimonialdifficulties should consider putting their estateinto a discretionary trust in their wills. It may notbe bombproof but it provides some protectionand is the best option available."The divorce courts are moving in the directionof looking behind trusts and not allowingpeople to hide assets, even if they are offshore,from their considered gaze.There's anold saying"you canrun butyou can'thide"CRIPPSLIFE11FIND OUT MOREFor more informationplease contact:Amanda AndrewsPartnerT:01892 506 159E:amanda.andrews@crippslaw.comi

With the new Bribery Act 2010 coming into forcefrom 1 July this year, any company tempted togrease the wheels for a lucrative business contractwill have to think twice. The new Act carries aweighty 10 year maximum prison sentence.With the Bribery Act 2010 in place the UKGovernment intends to crack down on underhandmethods of doing business. The Act replacesBritain's patchwork of late 19th-century statutesand 20th-century common law, which has made itdifficult in the past for the authorities to securesuccessful prosecutions. It will also bring thecountry into line with international best practiceand reinforce the UK's reputation as oneof the least corrupt countries inthe world.The Act has been along time coming.There have beenconcerns aboutthe Act's possibleeffects on theability to winbusiness andthere has been agreat deal ofmedia interestover the supposedthreat to corporatehospitality. The Government hasemphasised from the outset that'reasonable and proportionate' corporatehospitality given in 'good faith' would not bebanned. The vast majority of corporate hospitalitywill not constitute bribery. There is a fine line to bedrawn though. If the hospitality is so excessivelylavish that it can be inferred that it is intended toencourage or reward improper performance orinfluence an official, then it will fall foul of the new Act. In broad terms the definition of bribery in the Actcovers anything seeking to influence a decision-maker by giving some kind of extra benefit ratherthan what can legitimately be offered as part ofthe tender process. The Act replaces the existinglaw on bribery with four offences: bribing anotherperson; being bribed yourself; bribing a foreignpublic official; and commercial organisationsfailing to prevent bribery. The last of these points is the biggest concern tocorporations as it will make employers responsiblefor any acts of bribery carried out by theiremployees, agents or other representatives. Theoffence can be committed in the UK or overseasand, for the first time, the Serious Fraud Office willnot have to prove intent by the board directors -merely that fraud has been committed. A companywhose overseas agents, suppliers or joint venturepartners are involved in fraud will be held liable.The only defence for a company is to show that ithas 'adequate policies' in place to combatbribery.As Liz Barton, an associatesolicitor in the corporate teamat Cripps Harries Hallcomments "this has beensomething of a stickingpoint. The initial draftguidance on whatconstituted 'adequatepolicies' was criticised forlacking clarity and failingto give businesses enoughinformation to assesswhether they had takenenough steps to avoid liability."The guidance sets out six principleswhich form the basis of anti-briberycompliance. They are meant to be based on therisk that a company faces (for example, the burdenof compliance on a company only operating in theUK is likely to be less onerous than a businessoperating in the oil industry overseas) andproportionate. Few directors of companies wish to take the risk offalling foul of the Act. They are anxious to avoidboth the harsh punishments envisaged in the Actand the potential for adverse publicity. As LizBarton says "many employers see this as anopportune moment to review any potentialbribery risks in their business and put properprocedures in place both to ensure fair play andprotect themselves."12CRIPPSLIFElegalupdateCorruption crackdown"manyemployerssee this as anopportunemoment toreview anypotentialbribery risksin theirbusiness"FIND OUT MORELiz BartonAssociateT:01892 506 190E:liz.barton@crippslaw.comIf you have anyconcerns pleasecontact :i