Ordway Law Group, LLC
Ordway Law Group, LLC
Divorce & Family Law

How a trust is treated in a divorce

On Behalf of | Nov 14, 2022 | Family Law |

Divorces are stressful and complicated. The division of assets is challenging, especially in high-asset divorce cases and those with financial trusts.

Trusts have complicated laws. When you formed your trust and what property it holds has an impact on how it is treated during a divorce. This is what you should know.

Trust formation period

If you created your trust before you got married, it is not considered a divisible asset in a divorce. If it includes property that you had before the marriage, those assets are not typically divided. The only property or financial assets that are divisible during a divorce were purchased after you married your spouse.

Trust income

If you receive income from your trust, a judge may use it to determine child or spousal support. Therefore, although you may keep your assets, you may have to pay more in support if you are the breadwinner or you have a higher income than your spouse.

Gifts and inheritance

If you received the assets in your trust as gifts or inheritance, they are typically untouchable in a divorce. Therefore, if you were the beneficiary of a full trust or you included assets you received as a beneficiary in your own trust, they are separate property and a judge should not divide them.

Trust type

If your trust has marital property, its division depends on the trust type. You can dissolve revocable trusts, so a judge can divide them. You as a settlor do not typically control the assets in an irrevocable trust, so these assets are not often divided, but if you are a beneficiary, are subject to division. A judge will evaluate an irrevocable trust created without your consent.

To protect yourself from further divisions, update your estate plan and create a new trust after your divorce.

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