A trust is a legal instrument that controls property or assets for the benefit of another party. Families often set them up for estate planning to protect wealth, pass down property, or manage funds for children or future generations. But once divorce enters the picture, things can start to get murky.
This begs the question: What happens to family trust in a divorce? Several factors are at play here.
What Kind of Trust Is Involved?
One of the most important things to consider in a divorce involving a trust is what type of trust you’re dealing with. A Revocable Trust is flexible by design. The Grantor can change the terms, move assets in or out, or even dissolve it entirely. Because the Grantor retains control over a Revocable Trust, courts may treat the trust’s assets as part of the marital estate—particularly if those assets were acquired or used during the marriage.
An Irrevocable Trust, on the other hand, is much more rigid. Once it’s created, it’s usually locked in—meaning the Grantor gives up control and can’t just change things whenever they want. The assets in an Irrevocable Trust are generally considered separate property since the Grantor gave up control. However, if the trust was funded with community property or a spouse is a named beneficiary, the court may still evaluate its impact when dividing assets.
If one spouse benefits from the trust, or if the trust was funded with shared assets, the court might still consider it when dividing property. So, while the type of trust matters, how it is used matters just as much.
When Was the Trust Created?
Was the trust created before or during the marriage? If a trust was set up before the marriage and kept entirely separate from marital assets, it might be protected from asset division. But if marital funds were added to the trust—or if one spouse benefited from it during the marriage—it could be subject to division.
However, it doesn’t necessarily mean the trust will be split in half.
Sometimes, it just affects how other assets are divided by the court to balance things out.
Finally, Whose Name Is On The Trust and The Assets?
Let’s say you are listed as the trust’s Grantor, Manager, and Beneficiary. In this case, if no marital funds were added to the trust, you would be the sole owner of the trust, and it would most likely be protected from asset division. However, if the name of the Grantor, Manager, or Beneficiary changes during the marriage, the trust might become eligible for asset division.
At that point, the courts will determine the division of the trust assets.
In short, not all trusts are automatically protected from divorce. Working with an experienced family law attorney and a competent financial advisor is vital if you’re facing a divorce and a trust is involved. Look for professionals who understand how a divorce can affect a trust. Every situation is different, and a just a few minor details can change everything.
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