It is common for Jersey discretionary trusts to grant a power to the trustees to exclude a beneficiary from receiving any further benefit under the trust, but should you exercise this power to exclude a divorcing beneficiary? In a recent case before the court in Jersey it was held that the degree of reasonableness of a trustee's decision to exclude a beneficiary is the main factor in determining whether it is a proper exercise of such power by the trustee.
The wife in this case had been awarded approximately HK$832.5 million (of which approximately HK$770.5 million was to come from the trust fund). The court held that, as the money was to be paid to the wife as part of a divorce order intended to achieve a clean break, it was indeed reasonable that the trustee conclude that the remaining assets of the trust should be held exclusively for the remaining beneficiaries of the trust, to the exclusion of the wife. See Representation of the Otto Poon Trust .
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