If you’re going through a divorce, reviewing your trust – and really your entire estate plan – is absolutely essential. Trusts are not all the same, and the way yours is structured, funded, and written will determine how it’s impacted by divorce. Failing to review and update your plan during this time can lead to unintended and sometimes costly consequences.
Here are a few key things you need to know:
1 | The Structure of Your Trust
Many trusts name a spouse as both trustee and beneficiary. If you’re divorcing, you’ll want to carefully consider whether that still reflects your wishes. Even if you want your spouse to remain part of your plan, the trust should be updated after your divorce is finalized to make your intentions clear and legally binding.
2 | Revocable vs. Irrevocable Trusts
If your trust is revocable, you can usually make changes fairly easily. However, once you file for divorce, temporary court orders may restrict moving assets around until the divorce is final. If your trust is irrevocable, changes are far more complicated. You may need court approval to replace trustees or adjust the terms, and in some cases, the trust assets themselves could be considered in the divorce settlement.
3 | State Laws on Community Property
How your trust is treated also depends on your state’s property laws. In community property states, assets acquired during marriage are generally considered joint property. Sometimes, divorcing spouses try to hide assets in trusts to avoid splitting them – which can cause serious legal problems. Even if the trust assets are separate property, income from the trust may still be factored into child support or spousal support.
Why You Shouldn’t Wait
Divorce is already stressful, but ignoring how it affects your trust and estate plan could leave your assets unprotected or distributed in ways you never intended. Reviewing your plan now is the best way to ensure your wishes are honored and your family is cared for.
As your attorney, I can help you review your trust, understand how divorce impacts your plan, and make the necessary updates. Together, we’ll protect your assets, preserve your intentions, and make sure your plan truly works for your future.
At Cheever Law, we don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love, starting with a valuable and educational Life & Legacy Planning Session. This will allow you to get more financially organized and make the best choices for the people you love. If you have already completed your estate plan, we will review that plan at your Life & Legacy Planning Session to ensure that it will work the way you intend and address any holes or gaps that may be present if circumstances have changed since you executed your plan.
To learn more about our one-of-a-kind systems and services, contact us or schedule a no-obligation 15-minute introductory phone call today.