Are Trust Assets Divided in a Malaysian Divorce?

Which kinds of trust come up in a divorce?

A trust is an arrangement where one person (the trustee) holds assets for the benefit of others (the beneficiaries). The main types you may meet are:

• Family trusts, set up to hold property or investments for family members.
• Discretionary trusts, where the trustee decides who gets income or capital, and how much.
• Resulting trusts, which arise automatically when one person pays for an asset registered in another’s name.

Each raises different questions about whether the assets can be divided. The answer depends on the trust’s terms and each spouse’s role in it.

Can the court look behind a trust?

Yes. Section 76 of the LRA 1976 lets the court divide assets acquired during the marriage. The court looks at what a trust does in practice, not just what the paperwork says.

It pays close attention where the person who set up the trust keeps control. If your spouse can direct investments, withdraw money or change beneficiaries, the court may treat the assets as really theirs.

What if the trust was set up to defeat your claim?

Under Section 102 of the Act, the court can set aside a transfer of property made in the three years before the application if it was meant to deprive you of your rights or reduce maintenance. It can also stop a planned transfer. This can cover moving assets into a trust to shrink the matrimonial property pool.

Timing matters. A trust set up years before any marriage problems is treated differently from one created when divorce was being considered.

How is a discretionary trust interest valued?

This is hard, because the beneficiary has no fixed right to anything. Even so, the court does not ignore it.

The court looks at past payouts, what the trust owns and how likely your spouse is to benefit in future. Regular payments from the trust may be treated as a financial resource your spouse can rely on.

What about resulting and constructive trusts?

If one spouse paid for a property registered in the other spouse’s or a third party’s name, the payer may be the beneficial owner. The court can recognise this and include it in the division.

A constructive trust may arise where it would be unfair for one person to deny the other’s share. For example, if both of you paid towards a property held in one name, the court may find the contributing spouse has a share.

How can you find trust assets?

The financial disclosure process is your main tool. Both spouses must disclose all assets, including trust interests. Hiding a trust can lead the court to draw conclusions against the spouse who hid it.

Your lawyer can apply for orders to obtain trust deeds, accounts and records of payouts. Trusts held overseas need extra steps, but Malaysian courts can still take them into account.

Looking to engage a divorce lawyer? Trust cases often need a lawyer and a forensic accountant working together. If you suspect your spouse has moved assets into a trust and are unsure what can be claimed, request independent lawyer contact via WhatsApp: Request Lawyer Contact. For general information, use our guides and tools.