Trusts are a common component of many estate plans today. People often set up living trusts to hold their assets, including their homes, bank accounts and other property. Many people establish them to hold funds for their children to inherit when they’re older. Some trusts can provide protection from creditors and lawsuits. Even if you don’t have a trust of your own, you may be the beneficiary of someone else’s trust — perhaps one set up by parents or grandparents.
If you are considering divorce, should you be concerned that your spouse will be entitled to a share of your trust? It all depends. If the trust was set up before you married, it is not considered marital property, and therefore, typically is not subject to division in a divorce.
Here’s where it can get complicated, though. If you commingled any of the assets in the trust with marital assets, then your spouse can seek a portion of them. For example, say that you purchased a home while you were single and placed that in your living trust. That home is yours alone — unless your spouse contributed to paying the mortgage or remodeling it. Then it becomes a marital asset, and they can claim a portion of it in the divorce.
The best way to “divorce-proof” a trust is to keep all of the assets in it entirely separate from those of your spouse or any of your combined marital assets.
If you’re considering divorce or believe that your spouse is, it’s important to talk with your attorney not only about trusts you’ve established but also those on which you’re a beneficiary. You want to know what assets — if any — your spouse may be able to seek. If you’re the beneficiary of any trusts, depending on how they were established, your spouse may be able to use them as a reason not to pay spousal support.
It may be best to discuss these matters with an estate planning attorney as well as a family law attorney — or an attorney with experience in both areas of the law.