DIVORCING? HERE’S WHAT YOU SHOULD KNOW ABOUT HOW IT MAY AFFECT YOUR TRUST
Trusts vary in their structure, funding, and terms, so it’s hard to know how divorce will impact your trust without review. It’s safe to say, without question, your trust (and really your entire estate plan) should be reviewed during your divorce to prevent unforeseen negative outcomes.
The impact of a divorce on your trust can depend on the following:
The Trust’s Structure
Trusts frequently name the spouse as a trustee and beneficiary. In the event of a divorce, clarify your wishes in regards to these provisions. Even if you want to keep each other in your financial plans going forward, the trust should be amended appropriately after your divorce is complete so your intention is clear.
Whether the Trust is Revocable or Irrevocable
If your trust is revocable, changing the terms of the trust is easy. However, you may have to wait until after your divorce is final to make any changes, due to “orders” that go into effect when you file for divorce that may prevent you from moving assets. If your trust is irrevocable, changing the terms of the trust is not so easy. It might be necessary to petition the court to change the trustees, for example, and the trust assets themselves may or may not be part of the final divorce judgment.
Your State’s Laws on Community Property
Divorcing parties sometimes attempt to shield assets in trusts to keep them out of the pockets of the soon to be ex-spouse. When done surreptitiously, this could significantly complicate the divorce. Even when the assets in a trust are separate property, the income from the trust might still be considered for child support and alimony purposes.
Trusts can be affected by divorce so you should take steps to protect your trust and your intentions. At Kira Doyle Law, we can help you navigate your divorce so your assets, including those held in trusts, remain under your direction and control. If you are ready to take the next step in protecting your trust in the event of a divorce, begin by calling our office in St. Petersburg, Florida, at 727-537-6818, to schedule an appointment with one of experienced Estate Planning Attorneys today!