Q&As

An order was made under Schedule 1 to the Children Act 1989 for a property to be placed in trust for the benefit of a child and revert to the child’s parent when the child completes their education. If that parent is made bankrupt, will the trustee in bankruptcy be bound by the terms of the trust?

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Published on LexisPSL on 05/04/2019

The following Family Q&A provides comprehensive and up to date legal information covering:

  • An order was made under Schedule 1 to the Children Act 1989 for a property to be placed in trust for the benefit of a child and revert to the child’s parent when the child completes their education. If that parent is made bankrupt, will the trustee in bankruptcy be bound by the terms of the trust?

The decision in Mountney v Treharne provides authority for the general principle that a property adjustment order made before the presentation of the bankruptcy petition will be valid and will bind the trustee. However, there are notable differences between that case and the scenario of this Q&A, ie in that case the order was made under section 24 of the Matrimonial Causes Act 1973, and the husband was ordered to transfer all of his interest in the matrimonial home and did not retain a beneficial or legal interest in the property. See Practice Note: The impact of bankruptcy on divorce proceedings, in particular, the section ‘The impact of bankruptcy on divorce proceedings—The property adjustment order made before the bankruptcy proceedings commence’.

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