Asset protection prior to marriage and personal protection in the event of divorce: the strategic role of trusts

In recent years, interest in legal instruments that can guarantee the protection of assets in anticipation of a marriage or its potential crisis has grown exponentially. This applies both to international clients—traditionally more attentive to advance planning—and to a new segment of Italian clients, increasingly aware of the financial risks associated with the failure of a marital union.
Among the most sought-after and controversial instruments is the trust, an institution of Anglo-Saxon origin that, if properly structured, can offer effective asset protection both premarital and as a shield in separation and divorce proceedings. However, the use of trusts in family matters requires sophisticated planning and careful risk analysis, especially given the evolution of case law, particularly English law, which is increasingly influential in cross-border contexts.

Trusts and divorce: a comparative reading of judicial practice
According to the established position of the English courts, in determining the financial obligations between spouses in divorce proceedings, the judge must evaluate all available resources, including those held in trust, if they are considered to be a genuine financial resource of the beneficiary.
The leading case Charman [2007] EWCA Civ 503 introduced the test of “judicious encouragement”: if the spouse can demonstrate that the trustees would be likely to distribute assets to him or her, those assets can be considered disposable. This principle was recently confirmed in HO v TL [2023] EWFC 215, which provided a detailed list of factors to consider, including:
* The nature and purpose of the trust;
* The position of the beneficiary spouse within the list of beneficiaries;
* The history of distributions made;
* The level of control exercised by the beneficiary;
* The degree of participation and transparency of trustees in the judicial process.
In more complex cases, the trust may be classified by the Court as a nuptial settlement, meaning a marital agreement, with the result that the judge may vary the structure of the trust itself, even ordering distributions in favor of the non-beneficiary spouse, excluding beneficiaries, or removing trustees.

The Italian position: caution, multidisciplinarity, and new perspectives
In the Italian context, trusts are not regulated by the Civil Code, but their validity is recognized by virtue of the 1985 Hague Convention (ratified by Law 364/1989). In matters of property and family law, however, the use of trusts must comply with mandatory principles such as Article 2901 of the Italian Civil Code (revocation action) and Article 324 of the Italian Civil Code (protection of the rights of children and spouses).
With the enactment of the Cartabia Reform and the new unified procedure for matters relating to persons, minors, and families (Article 473-bis of the Italian Code of Civil Procedure and subsequent articles), the centrality of the individual in family proceedings is even more evident. Italian jurisprudence is slowly opening up to the idea that sophisticated instruments such as trusts can be used not only to conceal wealth, but also to responsibly manage family assets, including inheritance and intergenerational matters.

Best practices and operational suggestions
In light of Anglo-Saxon case law and international practice, there are several measures that could be useful to protect family assets and ensure the future of one's heirs and the protection of family assets:
1. Do not include spouses as direct beneficiaries, especially in trusts established shortly before or during marriage.
2. Limit the powers of the settlor and beneficiaries, preventing one spouse from having unilateral power to modify or directly access the funds.
3. Structure sub-trusts or dynastic trusts, with multiple and generational beneficiaries, so as to strengthen the institution's "family" purpose.
4. Prefer loans to capital distributions, possibly with adequate guarantees and documentation confirming their onerous nature.
5. Choose jurisdictions that are more attentive to family protection.
6. Accompany the trust with a prenuptial agreement, in which the parties define their respective financial expectations in the event of a crisis.

Conclusion: prevention as a form of protection
In conclusion, protecting your assets before a wedding or during a marital crisis doesn't mean shirking your responsibilities, but rather planning wisely. There are many legal tools available, but they must be handled with care and responsibility.
It's essential to consult with professionals who are experts in international family law, property law, and protection tools such as trusts. The complexity is high, but solutions exist: you just need to know how to build them with method and vision.

Avv. Armando Cecatiello
International Family Law and Asset Protection Milan – Lugano