“..a Dear me trust…” – Divorcees with interests in trust assets BEWARE

In the matter of AAZ v BBZ [2016] EWHC 3234 (Fam), Mr Justice Haddon-Cave very aptly and bluntly described the trust in this matter at para 72 of his judgement: “Thus, the way in which the Trust is intended to operate is remarkable in its simplicity: i.e. by H, qua Principal Beneficiary, asking himself, qua sole director of C Ltd, for a distribution and then H, qua Protector, asking himself whether or not such a distribution should be met. The Trustees can ignore the needs of the other beneficiaries and benefit H by transferring the whole or any part of the capital to him. The Trustees (in essence H) owe no duty of care and are free from the self-dealing rule: he can pay money to himself whenever he wishes. The Trust document is not a sham in the sense of pretending to be something that it is not. It is a remarkably candid and pellucid document which makes no pretence to be anything other than what it is, namely what is colloquially called a ‘Dear me’ trust for H for his lifetime.”