Trusts are now part of the financial planning for more people, not just the affluent, to protect their assets, provide continued support to their children or to safeguard their businesses from lawsuits or creditors. Trust beneficiaries or owners can take steps to protect a trust from property division in a high net worth or even more routine divorce.
Trust assets
All income and assets become martial property after marriage except for a few specific exemptions. Your spouse may have a claim on a trust created after marriage and where martial property was placed in the trust. That spouse even has a claim if you place your own income, investments, stocks, bonds, or real estate in the trust.
Mixing assets
The safest way to protect a trust against property division is creating it before marriage. This permits you to put assets into the trust that are not marital property. After assets are placed into the trust, do not commingle your income, investments, stocks, bonds, or real estate in the trust because this may make them vulnerable to your spouse’s claims in a divorce.
Drafting
The wording and drafting of a trust can determine whether its assets are protected from property division or other matters. Your spouse may claim that you do not need spousal support, for example, if you are a beneficiary of a trust created by family members with the ability to take unlimited trust distributions.
If parents or family members are creating a trust and naming you as beneficiary, they should add special provisions in the trust to make it harder for your spouse to claim that you have unfettered access. This could help you dispute claims that you are not entitled to support in certain cases.
An attorney can help you determine whether your trust assets are vulnerable in a divorce. They can provide advice on your options and ways to protect your trust assets and income.
